Cash payments journal

Definition

A cash payments journal is a specialized accounting journal used to record all cash disbursements, including payments made by check or in cash. It helps businesses track their outgoing cash flow and manage expenses efficiently.

5 Must Know Facts For Your Next Test

1. Transactions recorded in the cash payments journal include payments for inventory, operating expenses, and other liabilities.
2. Each entry typically includes the date, amount, payee, and account debited.
3. The journal helps ensure that all cash outflows are systematically documented and easily traceable.
4. It reduces the volume of transactions posted individually to the general ledger by summarizing them periodically.
5. The total of the cash column at the end of a period should match the decrease in the cash account on the general ledger.

Review Questions

Related terms

Cash Receipts Journal:

A special journal used to record all incoming cash transactions.

General Ledger:

A complete record of all financial transactions over an entity's lifetime.

Accounts Payable:

Amounts a company owes to suppliers for items or services purchased on credit.