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Cash Disbursement Journal

An organization's cash payments are meticulously documented in the cash disbursement diary. The journal details the sums paid, the recipients' names, the dates on which checks and other payments are issued, as well as the accounts that were charged. Finding the specifics of individual payments can be done with the help of this journal. The general ledger receives a summary of the data from the cash disbursement journal on a regular basis.

Understanding a Cash Disbursement Journal

These journals, which are often kept by accounting software, include crucial details such as the disbursement amount, check number, transaction type, payee, payer, and memo. However, some companies also keep track of other crucial information, such as discounts for buying in bulk. Different expense kinds may either be listed in different columns or given unique codes.

Reconciling the Cash Disbursement Journal

As part of the month-end closing procedure, the ending balance in the cash disbursement journal should be contrasted with the corresponding ending balance in the general ledger. If there is a discrepancy, it was most likely brought on by extra entries that accumulated in the journal but were not added to the general ledger. Additionally, a journal entry that wasn't additionally recorded in the journal might have been produced and applied directly to an account in the general ledger.


For instance, a store would need to make numerous payments for their payroll, accounts payable, and inventory costs. For raw materials and production costs, a manufacturer could have entries. The journal details each transaction's impact on the overall cash balance as well as the accounts that are debited and credited in each transaction.

This notebook can be used by management to track not just how much cash has been spent but also what it has been used for. To put it another way, management can review the cash disbursements log to determine what proportion of cash is going toward inventory vs other bill-paying expenses.

Cash Disbursement Journal Structure

For the purpose of tracking the company's financial outflows, the cash disbursement log has a number of columns. The columns include the date of each cash payment, information about the other ledger account that was impacted, the check number issued by the company, the total amount of cash paid, the credit-control account, which displays the amount deducted from the creditor's account, taxes paid, and special columns that specify the type of transaction, such as advertising, wages, etc.

At the conclusion of the journaling period, each of these columns is then summed up to get a total. The general ledger is then updated with this data.

Key Takeaways

  1. An internal accounting document known as a cash disbursement log lists all financial transactions involving cash or cash equivalents.
  2. Prior to payments being posted to the general ledger, a cash disbursement journal is completed and used.
  3. The disbursement amount, the check number, the transaction type, the payee, and any other essential information are all contained in a cash disbursement diary.
  4. By giving clear pictures of inventory costs, salaries, rental charges, and other external costs, cash disbursement journals can aid business owners in managing their cash flow.
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