What does a cashbook primarily track?

A cashbook primarily tracks a record of the movement of money in and out of an organization. It serves as a financial journal that captures all cash transactions, including cash received (inflows) and cash paid out (outflows). This comprehensive tracking allows businesses to monitor their cash flow effectively, manage funds, and ensure liquidity.

The cashbook is essential for reconciliations and oversees daily financial activities, providing insights into how much cash is available at any given time. This ongoing record helps in preparing cash flow statements and is crucial for businesses in managing their operations.

In contrast, focusing solely on monthly expenses, salaries paid to employees, or the value of inventory does not encompass the broader tracking of cash flow that a cashbook fundamentally serves. The cashbook's primary role is much more extensive as it covers all cash transactions.