The cash journal is a kind of diary that the Treasurer will need to keep in recording every cash transaction that happens in the Local Fund. A traditional paper ledger may be used, or a computer spreadsheet, or a more complex commercial accounting software (e.g. QuickBooks) that automates these tasks. In any case, the basic process will be the same. The information contained in the cash journal helps to:

● Keep the Assembly’s checking account up to date.

● Provide background information on all money taken in and money paid out of the Local Fund.

● Categorize expenditures according to the Assembly’s budget.

● In most accounting programs, the cash journal is set up using a double-entry system, which means that every amount is recorded twice. This allows checking for accuracy of all transactions made in the system while saving time in the long run. For example, a $100 donation will be recorded as cash in the cash account on the cash journal; and the same will be recorded as contribution in the contribution account. So to check its accuracy, the cash in the bank must equal the contribution recorded as being received in the Treasurer’s book.

On the Baha’i Administrative website under “Forms & Manuals” page, there is “Treasurer’s Tools” link that should be familiar to the Assembly Treasurer, if not the whole Assembly. On the “Treasurer’s Tools” page under the “Accounting” section there is a link to a spreadsheet that is referenced in the guidelines below for describing on how to set up a cash journal on a spreadsheet called “Accounting Worksheet for LSAs (XLSX)". Found under accounting forms.

The spreadsheet has different worksheets or tabs starting with the “Budget Information” and then listing all the nineteen (19) Bahá’í months, ending with a “General Ledger” sheet and receipts sheet called Rec#101-500. This particular section discusses how to create a general ledger as demonstrated on the “General Ledger” tab (sheet) for those who opt to use it as a financial recording system.

● Each column of the cash journal should have a heading. Working from left to right, as in the spreadsheet provided on the Treasurer’s Tools, make a column for the DATE, the DESCRIPTION of the entry, the CHECK NUMBER and the RECEIPT NUMBER.

● The next three columns have the general heading of CASH IN BANK. This is where the record of the Assembly’s checking account is kept. Under CASH IN BANK, the first column is titled Deposits and is where money going into the checking account is recorded. The next column, where we record money paid out, is titled Checks. Finally, there’s a column to keep track of the checkbook Balance, which goes up or down every time a deposit or a check is entered.

● The remaining cash journal headings are taken from the community’s budget. Under the general heading of INCOME, money coming into the Fund is described either as a Contribution or as Other Income. Under the general heading of EXPENSES, money paid out is described by recording the amount under one or more related budget categories. The Treasurer might need columns for such expenses as:

○ The Bahá’í International Fund (BIF).

○ The Continental Bahá’í Fund (CBF).

○ The National Bahá’í Fund (NBF).

○ Regional Bahá’í Council (RBC).

○ Administrative expenses—postage, stationery, hall rental and refreshments for Feasts; liability insurance (the Assembly receives an annual bill from the National Spiritual Assembly); Post Office box rental, computer supplies, telephone bills, etc.

○ Scholarships.

○ Education—children’s classes, institute teacher expenses, special consolidation programs.

○ Teaching—Firesides, audio-visual aids, transportation, extension teaching activities, etc.

○ Proclamation—literature, hall rental, speaker expense, publicity, refreshments, etc.

○ Other expenses—unusual expenses such as an inter-community activity that may not fit into another category. Property is another example—used only if the Assembly owns real estate (land or buildings).

Now that the cash journal is set up, you are ready to begin making journal entries. These should be made in ink. However, you might use pencil when totaling each column in case there is a math error.

○ We have already seen that when the Treasurer takes in contributions to the Fund, they should make out a receipt for each gift. However, it is not necessary to make a separate journal entry for every receipt. Instead, the Treasurer should total current receipts and enter this amount on one line of the cash journal. For example, receipt numbers 101–110 are totaled and one entry is made for $200.00 rather than making several smaller entries (see line 6 of the sample cash journal).

○ To make an entry in the cash journal, first write the DATE, the DESCRIPTION, and the RECEIPT NUMBERS used. Next, total the receipts and enter the amount as a Deposit under CASH IN BANK, increasing the Balance by the same amount. Then record the amount as a Contribution under the general heading INCOME (or EARMARKED CONTRIBUTION, as applicable). Be sure to deposit all money in the bank as soon as possible!

○ Whenever the Assembly sells something it owns (e.g. a filing cabinet), or receives a contribution designated for another Fund, the income is recorded in much the same way a regular contribution would be. The difference is that the amount should be entered in the Other column under INCOME.

Note: Contributions given “in support of the Assembly’s budget” should be listed as Contributions to the Local Fund since they count as part of the Assembly’s budget goal. Contributions over which the Assembly is not given discretion, that are not in support of a specified budget category, are handled differently, as “other income” or “earmarked contributions.”

Expenses are recorded in much the same way that income is. First, the DATE, DESCRIPTION, and the CHECK NUMBER are recorded. If bills are paid through an external Bill Pay system, such as through your bank, you may consider recording the service’s transaction Confirmation Number as the “Check Number”. The amount is listed as a Check under CASH IN BANK and subtracted from the Balance. Moving over to the EXPENSE columns, the amount should also be entered under the proper category. This method of recording expenses allows the Treasurer to relate them easily to the annual budget and helps the Assembly see how the money is being used.

Every Income or Expense category has to allow for both the addition and the subtraction of money. A larger system would accomplish this by using not one but two columns under each heading. Additions and subtractions are handled through the use of brackets.

The bracket merely indicates the opposite or reverse of a usual entry. That is, whenever a bracket appears, the bracketed amount is subtracted from the column total. The result would be less income or less expense, depending upon the transaction. For example, the Treasurer may give a cash advance to an individual to purchase deepening materials for the Assembly. This expense is listed under the Education expense column. If some of the money is returned, a way must be found to credit the Education category since the money originally listed in that expense area was not all spent. This is done by using brackets.

1. Checks that Bounce

Most major banks will have canceled checks viewable online. However, there may be times when a contributor’s check to the Local Fund will be returned by the bank through mail. Stamping the check NSF (Not Sufficient Funds) is the bank’s way of informing you that the contributor did not have enough money in the account to cover the check. Most of the time, the individual can be contacted and the check redeposited. If this cannot be done, make an entry in the cash journal and subtract the amount of the check from the Deposit, Balance and Contributions columns.

2. Totaling Columns Each Bahá’í Month

Every 19 days the Treasurer should add up the entries in each column and write the sums on the line described as Total (month). This shows at a glance what happened under each column during those 19 days. Next the Treasurer adds these totals to those of past months to arrive at the Total Year-to-Date figures. These updated totals enable the Treasurer to see how much money has been received or how much has been spent in each column since the beginning of the year. Having these totals available in the cash journal makes it easier to prepare monthly and year-to-date reports to the Assembly and the community.

3. Balancing the Monthly Bank Statement

This task is quite simple if it is done regularly, as soon as the bank statement arrives, and a cash journal that is current will help. Along with the statement, you will receive canceled checks and deposit slips (or images of them). Make sure that your records agree with those of the bank. Many times, the bank will provide such a form on the back of their statement. Follow up on checks which have been outstanding for more than two months. If there are ever problems balancing the account you can ask the bank or another Treasurer in your area for help.