About cash account types

A general-purpose cash account, sometimes referred to as a cash-on-hand account, is one that you use to record transactions performed with cash you hold in a till.
You record outgoing payments to suppliers and incoming payments received from customers.

You link a general-purpose cash account to a general ledger account of the Asset type to track transactions in the General ledger workspace. To be able to record incoming and outgoing payments, you need to associate this cash account with payment methods and entry types that are configured for usage in the Customer ledger and Supplier ledger workspaces. For example, you may need entry types for cash advances, cash receipts, or customer payments.

If needed, you can create a separate general-purpose cash account to record coins and cash that the company keeps on hand for small purchases (sometimes referred to as a petty cash account). Periodically, petty cash is replenished and should be reconciled with the receipts (that is, with any paper trail that is kept).

A bank cash account is a cash account you use to record the financial transactions between your organisation and the bank.
You create a separate cash account for each bank account.
For example: You may have a regular checking account and a savings account.

You link a bank cash account to a general ledger account of the Asset type to trace transactions in the General ledger workspace.
To be able to record incoming and outgoing payments, you need to associate this cash account with the payment methods and entry types that are configured for use in the Customer ledger and Supplier ledger workspaces.
For example: You can use an entry type to record interest income to your savings account and an entry type used to record bank charges to your regular checking account.
Also, you can associate a bank (created as a supplier) with each bank cash account, for informational purposes.

If you plan to make deposits into this bank account, you need to associate it with a clearing cash account that is configured to temporarily hold the money before it is deposited.
(Clearing cash accounts are described in the next section.)

Because each bank account is maintained by the bank, the bank's records over time may differ with those of your organisation, so periodic reconciliations are required.

A clearing cash account is a cash account that you use to temporarily store payments and cash that will be eventually deposited to the bank (and, hence, transferred from these clearing accounts to the appropriate bank accounts).
Clearing accounts should not be used for payments to suppliers.

You associate a clearing cash account with a general ledger account of the Asset type to track transactions in the General ledger workspace.
To be able to record incoming payments, you need to associate this cash account with payment methods that are based on the Cash means of payment, used in the Customer ledger workspace, and involved in creating batch deposits.
Clearing accounts should be set as the default cash accounts for associated payment methods.

To be able to transfer deposits from clearing accounts to a specific cash account that represents a bank account, you need to assign these clearing accounts to the respective bank cash accounts. For clearing accounts, no entry types are specified, and reconciliation is not performed.

You use a cash account for unknown payments to temporarily hold payments that cannot be entered as valid because the customer or supplier is unknown.

We recommend that you associate such a cash account with a general ledger account of the Liability type to track transactions in the General ledger workspace.
To be able to record such payments, you need to associate this cash account with payment methods used in the Customer ledger and Supplier ledger workspace.
Note, that an entry type that has an unknown payment account specified as the reclassification account should be associated with a bank cash account, to which you may receive such payments. Since accounts that temporarily store unknown payments are cash accounts denominated in specific currencies, special entry types should be created for each currency involved.