The rokad bahi, or cash book, is the most important book in a small business. It answers the one question that decides whether you can pay tomorrow's supplier: how much money do I actually have?
What goes in the cash book
Every movement of money, and only money:
- Cash sales and cash received from customers.
- Cash paid to suppliers, for rent, salaries, electricity, transport and tea.
- Money deposited into or withdrawn from the bank.
- Money the owner puts in or takes out.
Credit sales do not go in the cash book on the day of sale, because no money moved. They go in the customer's khata. When the customer pays, that payment goes in the cash book.
Three formats
Single-column cash book. One amount column on each side: receipts on the left, payments on the right. Best for very small shops that deal mostly in cash.
Double-column cash book. Separate columns for cash and bank on each side. With UPI and card payments now common, this is the format most shops actually need. A UPI payment from a customer goes in the bank column, not the cash column.
Petty cash book. A small fixed float, say ₹5,000, kept for minor expenses like courier charges and refreshments. When it runs low, top it up back to the fixed amount. This keeps small spends out of your main cash book.
A worked day
Opening cash in the drawer on 10 March: ₹6,500.
| Receipts | Amount | Payments | Amount |
|---|---|---|---|
| Opening balance | ₹6,500 | Milk supplier | ₹3,200 |
| Cash sales | ₹18,400 | Helper's daily wage | ₹600 |
| Received from Verma ji (udhaar) | ₹2,000 | Electricity bill | ₹2,150 |
| Deposited in bank | ₹15,000 | ||
| Closing balance | ₹5,950 | ||
| Total | ₹26,900 | Total | ₹26,900 |
The closing balance of ₹5,950 is what should physically be in the drawer. Tomorrow it becomes the opening balance.
The Cash book tab in our digital khata does this arithmetic for you, carries the closing balance forward automatically and shows the totals for any month.
The five-minute closing routine
At the end of every day:
- Make sure every payment and receipt of the day is entered.
- Note the closing balance shown by the cash book.
- Count the actual cash in the drawer.
- If they match, you are done.
- If they do not match, look for the usual suspects below before you close for the night.
A difference found the same day can usually be explained in minutes. A difference found at the end of the month almost never can.
Why the cash does not tally
- A UPI or card payment entered as cash. The cash book shows money that is actually in the bank.
- Owner's personal withdrawal not entered. Taking ₹500 for household use is a payment, recorded as drawings.
- Change given from a separate pouch. Keep one drawer and one float.
- A payment to a supplier recorded in their khata but not in the cash book. It must be in both.
- Simple addition mistakes. One more reason to let software add up for you.
Cash rules worth knowing
- Income-tax law restricts receiving ₹2 lakh or more in cash from one person for a single transaction or occasion, and businesses generally cannot claim a deduction for an expense paid in cash above ₹10,000 to one person in a day, with some exceptions. Use bank transfer or UPI for larger amounts.
- Keep bills and receipts for expenses. A cash book entry with no supporting bill is weak evidence.
These limits have specific exceptions and can change, so confirm the current rules with your accountant.
Common questions
What is the difference between a cash book and a khata?
The cash book records money coming in and going out, day by day. A khata records what each customer or supplier owes, including credit transactions where no money moved.
Should UPI receipts go in the cash book?
Yes, but in the bank column of a double-column cash book, because the money landed in your bank account, not your drawer.
This guide is general information to help you understand the topic. It is not legal, tax or financial advice. Rules and rates change; confirm details for your situation with a qualified professional or the official government portal. Read our editorial policy.