Business Finance and Arithmetic — Entrepreneurship STD 11 Commerce — Question

The importance of cash (money) in business is similar to that of blood in the human or any other living being. In business, all transactions are made by paying or receiving money. Cash register records all cash register transactions related to business. It means inflow and outflow of cash in the business are recorded in the cash register. Maintaining a cash book or register is very essential for every business.

• By recording all the entries it will be easy for further analysis of expenses, costs, revenues, profit, etc. can be made.
• The entrepreneur or other stakeholders can easily know the cash balance and bank balance at the any time.
• It also provides the information for daily receipts, payments and cash balance and bank balance at the end of each day.
• Recording of cash and bank transactions will be helpful for an entrepreneur about shortage or surplus at the end of the day so that he can take further decision.
• It helps keep an accurate count of inventory (Stock/ mercandise) and sale record of business.
• It helps check the misappropriations of the cash in the business.
• Hence, maintaining a cash book is very critical for the success of a business.