Cash Disbursements Journal

The cash disbursements journal, also known as the cash payments journal, is an accounting form used to record all cash outflows - purchases made in cash or cash disbursements. Examples are accounts payable, materials payable, and operating expenses among other cash purchases. Examples of other cash disbursements is a deposit to the petty cash fund. 

Your bookkeeper or accountant will record all these transactions in the cash disbursements journal before posting them to the general ledger, accounts payable ledger, etc.

This is usually done on a monthly basis. In some businesses, the cash disbursement journal is combined with the cash receipts journal and is referred to as the cash book.

The cash disbursements journal is an important tool in cash management – business owners can use this to see how much cash has been disbursed and where it went, calculating the percentage that went to inventory versus what went to paying other bills. The cash disbursement journal includes the check numbers of checks that were written, which is why many accounting software packages refer to the journal as a check register. These packages either have preset forms for the cash disbursements journal, or easily customizable forms to accommodate your needs.

Setting Up the Cash Disbursements Journal

Columns are set up for each transaction as follows: 

• Date
• Check number
• Explanation
• Cash credit
• Other credit
• Account debited
• Accounts payable debit

• Other debit.

The cash payment type columns may be more specific to the nature of business. For instance, some businesses may only need one column to record the cash amount whereas others need additional columns for accounts payable, discounts received cash purchases, etc. There should always be an ‘other’ column to record amounts which do not fit into any of the main categories.

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