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Cash Disbursement Journal: Definition & Examples

July 17, 2024

Are you keeping track of your business cash flow?

If you’re not tracking cash payments, it’s hard to know how much you’re really spending and receiving through your business.

This article will tell you what you need to know about keeping a cash disbursement journal, and how to create your own.

Here’s What We’ll Cover:

What is a Cash Disbursement Journal?

How to Create a Cash Disbursement Journal

Helpful Tips on Cash Payments

Stay Organized with a Cash Disbursement Journal

Other Resources on Small Business Accounting

What is a Cash Disbursement Journal?

A cash disbursement journal is a method of recording all cash flows for your business.

Many entrepreneurs start out their small business spending and receiving cash payments. Unlike credit card payments, there is not an automatic system recording each transaction. It’s up to you to keep track of those business expenses.

All cash purchases or cash equivalents get documented in your cash payment journal:

Merchandise inventory
Shipping costs
Equipment costs
Payments to vendors
Business loan payments

Each transaction gets submitted as a disbursements journal entry before being posted to the general ledger or accounts payable ledger.

By keeping a journal for your business expenses, not only can you see how much cash is being disbursed, but you can track what cash is being used for–allowing you to better strategize your business spending.

How to Create a Cash Disbursement Journal

Creating any type of accounting journal can be as simple or complex as you want you to make it. The more details you add to each payment journal entry, the better understanding you’ll have of your cash outflows.

Some key features to include in your journal entries include:

Type of payment (cash, check, or EFT)
Purpose of transaction
Amount debited or credited
Accounts involved
Transaction type

Document cash outputs in your cash disbursement journal example:

Date	Payee name	Transaction Purpose	Amount	Payment Type	Other Details
x/xx	Office Depot	Printer Ink	$36.00	Cash	Added to store account
x/xx	Fabric Co.	June Merchandise	$400.00	Check	Full inventory amount

Your cash disbursement journal should stay updated as you receive new merchandise, make business loan payments, or any other cash disbursing transactions.

Helpful Tips on Cash Payments

Along with your other accounting methods, a well-organized payment journal will help you keep your cash payments clearly documented and allow you to reference your cash balance and cash inflows to better support your business payments.

Use your payment journal in part with your other accounting ledgers (payable ledger, subsidiary ledger, etc.)
Document shipping costs, equipment costs, and other production costs
Keep track of your merchandise inventory and address damaged merchandise
Include your journaling period in your regular accounting periods to maximize accounting details
Use the information from your cash disbursements journal to update your accounts payable and other records when closing the books

Stay Organized with a Cash Disbursement Journal

An organized accounting method is a vital aspect of your business.

Whether using cash for business expenses, managing merchandise inventory, or looking to add detail to your general ledger, an accounting journal is a helpful asset to any small business owner. Use your payment journal in reference with your other accounting strategies for clear insight on your cash inflows and outflows