When the cash book is lost, you rebuild a cash account and a bank account from the figures the question gives. One movement is missing, and you find it as the balancing figure.
This lesson belongs to incomplete records. If the layout of the accounts is unfamiliar, revisit balancing ledger accounts first.
What goes on each side of a summarised cash account?
Receipts go on the debit side: the opening balance and money coming in. Payments go on the credit side: money going out and the closing balance. Add the receipts, add the known payments, and the gap is the missing payment.
Remember that banking moves money between the two accounts. It is a payment from cash and a receipt in the bank, never a new receipt for the business.
Worked example: Wei Jie’s night market stall
This is an original example. The owner of a night market stall gives this summary:
| Item | RM |
|---|---|
| Cash in hand, 1 January | 1 500 |
| Cash sales | 12 000 |
| Cash paid into the bank | 6 000 |
| Wages paid in cash | 4 000 |
| Cash in hand, 31 December | 2 300 |
| Bank balance, 1 January | 5 200 |
| Received from receivables by cheque | 38 400 |
| Paid to suppliers by cheque | 27 000 |
| Rent paid by cheque | 6 000 |
| Bank balance, 31 December | 7 900 |
Step 1: cash account. Receipts are 1 500 + 12 000 = RM13 500. Known payments are banked 6 000, wages 4 000 and closing balance 2 300, which is RM12 300. The missing payment is 13 500 − 12 300 = RM1 200, which is cash drawings.
Step 2: bank account. Receipts are 5 200 + 38 400 + 6 000 = RM49 600. Known payments are suppliers 27 000, rent 6 000 and closing balance 7 900, which is RM40 900. The missing payment is 49 600 − 40 900 = RM8 700, which is drawings by cheque, as the question says the owner paid nothing else.
Total drawings for the year would then be 1 200 + 8 700 = RM9 900, which feeds into profit in the next lesson.
The mistake that counts money twice
A student records the RM6 000 as a receipt in the bank account, but forgets to show it leaving the cash account. The same money is then counted in both places.
| Line | Wrong | Right |
|---|---|---|
| Banked amount in cash account | not shown | payment RM6 000 |
| Missing cash payment | RM7 200 | RM1 200 |
The error inflates the cash drawings by exactly the banked amount. Whenever money moves between two accounts, write it on both, once each.
Check yourself
A cash account has opening cash RM800 and cash sales RM9 000. RM7 000 was banked, RM1 200 was spent on expenses and closing cash was RM600. Find the cash drawings.
Answer
Receipts: 800 + 9 000 = RM9 800.
Known payments: 7 000 + 1 200 + 600 = RM8 800.
Missing payment, which is the drawings: 9 800 − 8 800 = RM1 000.
What to study next
You now have drawings, sales and purchases. Put them together in calculating profit after capital adjustments, then try the incomplete records practice set.
The cash profit and transaction timeline shows why cash movements and profit are different numbers. If you want a teacher to go through your own cash accounts, see online one-to-one Accounting tuition.