How to record cash in hand jobs
Cash from a customer is income like any other. Record each cash job and tip, then bank the cash without counting it twice.
This path is practice in how the records and the sums work. It is not tax advice. Any rate or allowance in a question is an example for that question, so check GOV.UK for the current figures.
In this room: 3 tasks, 8 questions
- Cash still counts3 questions. You pick the right answer, work out a figure and tick every answer that applies.
- Paying the cash into the bank2 questions. You post entries to T-accounts and find the mistake in a table.
- Cash spent before it is banked3 questions. You work out a figure, write a journal entry and pick the right answer.
Cash from a customer is business income, just like a bank transfer. The only proof of it is your own record, so write it down on the day.
- The date
- Who paid
- What the job was
- The amount
A tip a customer gives for the work is business income too. So is a job paid for with goods or a service instead of money: record it at the price you would have charged. If you are not sure about a payment, check GOV.UK or ask an accountant.
| Date | Customer | Job | Cash received |
|---|---|---|---|
| 25 Aug | Mr Price | Painting a shed | 180.00 |
| 26 Aug | The Hendersons | Painting the front door | 65.00 |
| 26 Aug | The Hendersons | Tip for the front door | 15.00 |
| 28 Aug | Fern Café | Painting the yard fence | 240.00 |
Answer the questions below
2 more questions follow in this task.
Paying cash into the business account moves money from the cash tin to the bank. It is not new income: the income was recorded on the day the customer paid.
If the money paid in is recorded as income as well, the same cash is counted twice and income looks too high.
Answer the questions below
1 more question follows in this task.
Sometimes cash is spent on the business before it reaches the bank. Record the full amount the customer paid as income, and the spending as a cost.
Banking what is left and calling that the income hides both figures, even though the profit comes out the same.
Mrs Okafor pays Dev £300 in cash for painting her kitchen. On the way home he spends £45.60 of it on paint for his next job, then pays the rest into the bank.
Answer the questions below
2 more questions follow in this task.