What is a daily cash book, and why does a shop need one?
A cash book is a day-by-day record of cash coming into and going out of the shop, with the balance that should be in the drawer. It is the simplest answer to "dukaan ka hisaab kaise rakhein": if the cash book matches the drawer every evening, most of your hisaab is under control.
Without it, small leaks stay hidden. A ₹200 tea-and-transport expense not written down, a ₹500 note given as change by mistake, or cash taken home for groceries all look the same at month end: "paisa kam hai". A cash book tells you on which day and in which column the difference started. It is also what your CA asks for first when preparing accounts, and if you are GST-registered, Section 35 requires you to keep true accounts of your sales and purchases anyway.
What columns go in a shop cash book?
Date, particulars, cash in, cash out and running balance are enough for most shops. Add a bill or voucher number column so every line can be traced to a paper.
| Time | Particulars | Bill / voucher no. | Cash in (₹) | Cash out (₹) | Balance (₹) |
|---|---|---|---|---|---|
| 9:00 | Opening cash in drawer | 2,000 | |||
| All day | Cash sales (from bills) | B-1201 to B-1288 | 18,450 | 20,450 | |
| 12:30 | Udhaar received from Sharma ji | R-045 | 1,500 | 21,950 | |
| 14:10 | Milk supplier paid in cash | P-112 | 3,200 | 18,750 | |
| 17:00 | Electricity bill | E-031 | 1,840 | 16,910 | |
| 19:30 | Owner withdrawal (home) | D-009 | 2,000 | 14,910 | |
| 21:00 | Deposited in bank | Slip 7781 | 10,000 | 4,910 | |
| 21:05 | Counted in drawer: ₹4,860 | Short ₹50 |
Sample figures only. UPI and card are kept out of this book because they never enter the drawer.
Get a ready-made version from our free Excel templates: the daily cash book there already has these columns and a running balance formula.
Should UPI go in the cash book?
Not in the cash column. UPI, card and bank transfers go straight to the bank, so put them in separate columns or a separate bank book; if they are mixed with cash, the drawer will never match the book.
A practical layout is one page per day with three sales columns, Cash, UPI and Card, and a total. The cash column feeds the cash balance; the UPI and card columns are checked against the bank or payment app statement. For a bill paid part cash and part UPI, split it on the bill itself and enter each part in its own column. Matching UPI to bills is a topic of its own; see How to match UPI payments with your bills every day.
How do I record expenses and owner withdrawals?
Write every cash expense as a separate cash-out line with a voucher or bill, and write cash you take home as "owner withdrawal" (drawings), never as an expense. Mixing the two makes your profit look lower than it is and confuses your CA.
- Shop expenses (rent, electricity, tea, transport, salary advances): one line each, with the bill or a self-made voucher signed by whoever took the cash.
- Supplier payments in cash: write the supplier and the purchase bill number, so the supplier ledger matches.
- Owner withdrawals: a separate line marked drawings. It is not a business expense.
- Advances taken from customers for future orders: note them separately; GST-registered shops must keep a separate account of advances (Rule 56(3)).
- Bank deposits: a cash-out line with the deposit slip number. The money has not been spent, only moved.
For a full system of expense heads, read How to track daily shop expenses.
How do I close the cash book every evening?
Work out expected cash from the book, count the drawer, and write the difference with a reason. It takes five minutes once the day's entries are in.
- Start from opening cash Take the opening balance written in the morning (yesterday's closing cash).
- Add cash received Add cash sales from the day's bills and any udhaar collected in cash.
- Subtract cash paid out Subtract cash expenses, cash paid to suppliers, cash refunds on returns, owner withdrawals and bank deposits.
- Count the drawer Count notes and coins by denomination and write the total.
- Record the difference Write "short" or "excess" with the amount and the likely reason, and initial it. Do not quietly adjust the figures.
- Carry forward The counted cash becomes tomorrow's opening balance.
The same method, applied to a billing counter with several cashiers, is in End-of-day cash reconciliation for retail shops.
Daily or weekly tally: what is enough?
Daily. A difference found the same evening can usually be explained, a missing bill, a wrong change, an expense not written; a difference found after a week usually cannot.
A weekly check is still useful on top: compare the week's cash deposits with the bank statement, look at total expenses against last week, and review any day that was short. If more than one person handles the drawer, close the cash at every shift change, so each person is accountable only for their own shift.
Which records does my CA need at month end?
Usually the sales and purchase registers, the cash book, bank statements and expense bills for the month. If you are GST-registered, the CA also needs sales by tax rate and HSN to prepare your returns.
- Sales register or bill-wise sales report for the month, split by cash, UPI and card
- Purchase bills from suppliers, with GSTIN and tax shown
- Daily cash book with closing balances and short/excess notes
- Bank statement and UPI settlement statements
- Expense bills and vouchers, and the list of owner withdrawals
- Sales returns and credit notes issued
- Customer dues (udhaar) and supplier dues at month end
- Closing stock value, if your CA asks for it
Keep these for the full record period: for GST, Section 36 says 72 months from the due date of the annual return. Income-tax law can separately require books of account depending on your income and turnover; ask your CA what applies to you. If your CA works in Tally, an export from your billing software saves them retyping (see Tally export).
Excel or software: which is better for the cash book?
Excel is enough if you bill by hand and have one counter; billing software is better once you make computer bills, because it fills the cash book from the bills instead of you copying totals.
With Excel, the weak point is typing: every cash sale total, refund and expense is entered twice, once on the bill and once in the sheet. With software, cash sales, refunds and udhaar collections come from the bills themselves, and you only add expenses and withdrawals. Either way, the habit matters more than the tool: open in the morning, close in the evening, write the difference.