1. How can we monitor our actual spending? Budgeting is very useful for helping people like the Foleys to predict their future
financial needs. However, their actual spending also has to be recorded to ensure that they are staying within their budget. This can be done by recording personal spending in an analysed cash book.
An analysed cash book is an account (or a record) of all money received and all money paid out over a period of time under different headings. Like all accounts, the analysed cash book has two sides: the left-hand side and the right-hand side.
Debit Side
The left-hand side is known as the debit (Dr) side.
The debit side is used to record anything we receive in.
In the analysed cash book, all money received will be recorded on the debit side. When we say ‘debit an account’, this means the transaction will be entered on the debit side of that account.
Credit Side
The right-hand side is known as the credit (Cr) side.
The credit side is used to record anything we pay out.
In the analysed cash book, all money paid out will be recorded on the credit side. When we say ‘credit an account’ this means that the transaction will be entered on the credit side of that account.
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The basic rule for filling in the analysed cash book is: Debit any money received in. Credit any money paid out.
