Cash Account

The cash account is likely the most important account in a company. No matter how much revenue they are generating, if they don't have enough cash to fund daily operations, managers (and the company they work for) aren't going to be around for too long. A company's cash account holds all records of transactions related to cash, particularly cash receipts from customers that are entered in the cash receipts journal and cash payments to vendors are entered...(take a guess here)...that's right, in the cash payment journal.

This information is then transferred to the general ledger that includes all revenue and expenses for the company. The amount of cash a company holds at a certain point in time (such as the end of a quarter) is listed on its balance sheet, along with cash equivalents that could be quickly converted to cash, such as Treasury bills and money market funds.

Some companies hold the enviable position of having too much cash on hand and must figure out what to do with it all. Many decide to give some back to shareholders in the form of stock buybacks and dividends.