• 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7

SMALL BUSINESSES

A small business – I.e. a business with a gross annual revenue of not more than $200,000 from the sale of goods, or not more than $350,000 from the performance of services – can prepare its accounts on the cash basis, which means the business can report only the income received and deduct the expenses paid during the accounting period.

 

Example:

Business providing the goods – Snackette

                               

Jane Thomas sells snacks in the Food Court at the Castries Market . She rents a stall and pays $500.00 rental per month. She employs two persons to assist with the daily operations of the business.

 

Jane Thomas can keep proper records by maintaining and updating the cash book together with some Profit and Loss items.

 

 

CASHBOOK

A Cashbook is a record of all payments and receipts by way of cash or cheque. It keeps track of how much money comes in and how it is spent.

 

An example of a simple cashbook format is as follows:

 

Date

Particulars

CASH

BANK

   

Dr. Payment           Cr. Payment

Dr. Payment           Cr. Payment

       
       
       

 

 

HOW TO RECORD RECEIPTS AND PAYMENTS?

Jane Thomas has total sales of $4,800.00 on January 31, 2001. On the same day, she made the following payments:

  • Wages for the month January - $300.00 per person
  • Rental of Stall - $500.00
  • Utilities - Electricity :$120.00; Water: $300.00

The above receipts and payments can be recorded as follows:

 

Date

Particulars

           
   

Cash

Bank

Sales

Utilities

Wages

Rental

   

Dr       Cr

Dr       Cr

       

31/01/01

Sales

             1,200

 

               150

     
 

Wages

                 600

     

                 600

 
 

Rental

                 500

       

                 500

 

Utilities

         420 

   

                 420

   

 

Jane Thomas should add up the columns at the end of the month to get the monthly balance for all items. The cash book figures can be used to reconcile with the business’ bank statement each month.

Share this post

Submit to FacebookSubmit to Twitter
Ⓒ2013 Inland Revenue Department, Government of Saint Lucia.