Cash Receipts Journal: Definition & Examples

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  • 0:01 Cash Receipts Journal
  • 1:36 Examples
  • 2:55 Lesson Summary
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Lesson Transcript
Instructor: Tara Schofield
This lesson explains how a cash receipts journal is used by a business, what types of transactions are posted in a cash receipts journal, and how to keep those transactions balanced.

Cash Receipts Journal

In accounting, journals are used to record similar activities and to keep transactions organized. One of the journals is a cash receipts journal, a record of all of the cash that a business takes in. It is reserved specifically for activities that involve receiving cash. In most businesses, there are cash receipts of some type. You may sell items or provide services that people pay for with cash, which may range from food or books to massages or even a ride in a taxicab.

Cash can be difficult to track, and if it is not properly accounted for, businesses could experience employee theft or misplaced money. Some business owners may use cash for expenses or purchases and forget to account for it properly. This is not only an improper business practice, but it may cause other issues, like incorrect income reporting to the I.R.S., and create many inaccuracies in a business' accounting records. Keeping accurate and consistent records is critical, especially with the cash receipts journal.

In a cash receipts journal, there are debit and credit entries. Because accounting transactions always need to remain in balance, there must be an opposite transaction when the cash is posted. When cash is received, one of the other accounts - sales, accounts receivable, inventory - must also have a transaction listed.

When cash is received, a cash entry is posted as a debit. In order to balance the transaction, a credit must be posted. A debit entry indicates that cash is increasing. A credit entry indicates another account is decreasing.

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