In accounting, we record all money-related transactions. One common transaction is a cash withdrawal from the bank. We call this the cash withdrawal from the bank journal entry. This entry means you are taking money out of your bank account and putting it in your cash box. The correct journal entry for this is Cash A/c Dr. To Bank A/c. This entry increases your cash balance and decreases your bank balance. You must use this entry whenever cash moves from your bank to your hands. This journal entry is very important in bookkeeping, especially for students and small business owners.
Journal Entry For Cash Withdrawal From the Bank
When a business withdraws cash from its bank account for office use or petty expenses, it reduces the bank balance and increases the cash in hand. The correct journal entry is: Cash A/c Dr. To Bank A/c. This entry shows that cash is coming into the business (debited) and the bank account is decreasing (credited). It follows the double-entry rule, where both assets change form but the overall value remains the same. This entry helps maintain accurate cash and bank records in the books.
Journal Entry Format
When a business or person withdraws money from their bank account, the cash in hand increases, and the bank balance decreases. So, we must debit the cash account and credit the bank account. This rule follows the double-entry system of accounting. The basic journal entry is:
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| dd/mm/yyyy | Cash A/c Dr. | xxxx | ||
| To Bank A/c | xxxx | |||
| (Being cash withdrawn from bank) |
This journal entry shows two important accounts:
- Cash Account (Dr.) – It shows the increase in cash.
- Bank Account (Cr.) – It shows the decrease in bank funds.
This entry is simple but very important. Every time you take money from your bank, you must record it like this.
Why We Use This Entry?
We use the cash withdrawal accounting entry to keep records clear. In small businesses, the owner may withdraw money from the bank daily. This entry helps in matching the bank statement with accounting records. It also helps to keep proper track of available cash and the balance left in the bank.
In accounting terms:
- Cash is an asset. When it increases, we debit it.
- Bank is also an asset. When it decreases, we credit it.
This follows the rule: Increase in assets = Debit, Decrease in assets = Credit.
Relation to Other Entries
This journal entry is different from:
- Cash deposited to bank (Bank A/c Dr. To Cash A/c)
- Cash withdrawn for personal use (Drawings A/c Dr. To Bank A/c)
These entries are not the same as a withdrawal from a bank journal entry for business use. So, always check the purpose of the transaction before you write the journal.
How To Record A Cash Withdrawal Journal Entry?
Recording the journal entry correctly is the most important task in accounting. This part explains how to record the cash withdrawal journal entry step by step. It also talks about how this affects your books and helps maintain accurate records. To record a bank withdrawal entry, follow these simple steps:
- Identify the two accounts involved:
- Cash Account (Increased) – Debit
- Bank Account (Decreased) – Credit
- Use the journal format to write the entry.
- Record this entry in the Journal Book.
- Post this to the Ledger Book under both Cash Account and Bank Account.
Example: Simple Journal Entry
Let’s say on 5th April, a company withdraws ₹10,000 from its bank for office use. The journal entry would be:
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 05/04/2025 | Cash A/c Dr. | 10,000 | ||
| To Bank A/c | 10,000 | |||
| (Being cash withdrawn from the bank) |
This format follows the cash withdrawal double-entry rule. You debit what comes in (cash) and credit what goes out (bank).
Ledger Posting
Posting this entry helps keep your cash and bank balances correct. This avoids confusion during audits and bank reconciliations
Cash Account:
| Date | Particulars | Debit (₹) | Credit (₹) |
| 05/04/2025 | Bank A/c | 10,000 |
Bank Account:
| Date | Particulars | Debit (₹) | Credit (₹) |
| 05/04/2025 | Cash A/c | 10,000 |
Common Mistakes to Avoid
Students must remember that cash withdrawal journal entries need attention to detail. Any mistake can affect the balance sheet or profit and loss account later.
- Wrong account names – Always write Cash A/c and Bank A/c correctly.
- Wrong amounts – Double-check the figures.
- Missing narration – Always write a short explanation (narration) for clarity.
Cash Withdrawal From Bank Journal Entry With Examples
This part will give you real-life and practical cash withdrawal from bank journal entry with examples. These examples will help you understand different situations where this journal entry is used. It will also show how this entry fits into your business books.
Let’s say a trader withdraws ₹5,000 from the bank for cash payments. Journal Entry:
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 01/05/2025 | Cash A/c Dr. | 5,000 | ||
| To Bank A/c | 5,000 | |||
| (Cash withdrawn from SBI Bank for petty expenses) |
This entry is simple and shows the flow of money clearly.
Example: Withdrawals in Cash Book
In accounting, we also write these entries in the cash book. The cash book shows both cash and bank entries in one place. When money is withdrawn from the bank:
- Debit side shows Cash Inflow
- The credit side shows Bank Outflow
Double Column Cash Book Entry:
| Date | Particulars | Cash (₹) | Bank (₹) |
| 01/05/2025 | To Bank | 5,000 | |
| 01/05/2025 | By Cash | 5,000 |
This format clearly shows how both accounts are affected.
Example: With Personal Use
If the business owner withdraws cash from the bank for personal use, we use Drawings Account instead of the Cash Account.
Journal Entry:
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 03/05/2025 | Drawings A/c Dr. | 2,000 | ||
| To Bank A/c | 2,000 | |||
| (Cash withdrawn from the bank for personal use) |
This is not the same as the journal entry for withdrawing cash from the bank for business needs.
Example: ATM Withdrawal by Proprietor
If a business owner withdraws cash using ATM and uses it for business, still the same bank to cash journal entry is used.
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 04/05/2025 | Cash A/c Dr. | 3,000 | ||
| To Bank A/c | 3,000 | |||
| (Cash withdrawn from ATM for business use) |
These examples make it easy for any accounting student to understand. Practice these entries regularly to become perfect in writing cash withdrawal journal entry correctly.
Relevance to ACCA Syllabus
This topic is closely tied to the ACCA Financial Accounting (FA) and Financial Reporting (FR) papers. ACCA emphasizes accurate recording of financial transactions using the double-entry system. Understanding the journal entry for cash withdrawal is essential for preparing financial statements, reconciling bank balances, and maintaining internal controls. This knowledge supports core accounting competencies and forms the foundation for higher-level financial analysis.
Cash Withdrawal From Bank Journal Entry ACCA Questions
Q1. What is the correct journal entry when cash is withdrawn from a business bank account for office use?
A) Bank A/c Dr. To Cash A/c
B) Cash A/c Dr. To Bank A/c
C) Bank A/c Dr. To Drawings A/c
D) Cash A/c Dr. To Capital A/c
Ans: B) Cash A/c Dr. To Bank A/c
Q2. Which accounting rule justifies debiting the cash account when withdrawing money from a bank?
A) Real account – Debit what comes in
B) Nominal account – Credit all incomes
C) Personal account – Debit the receiver
D) Real account – Credit what comes in
Ans: A) Real account – Debit what comes in
Q3. In the double-entry system, which two accounts get affected by a cash withdrawal from a bank?
A) Cash and Capital
B) Cash and Drawings
C) Cash and Bank
D) Bank and Expenses
Ans: C) Cash and Bank
Q4. Where is the cash withdrawal from a bank recorded in the cash book?
A) Debit side only
B) Credit side only
C) Both debit and credit sides
D) Not recorded in the cash book
Ans: C) Both debit and credit sides
Q5. Which financial statement reflects the effect of a cash withdrawal from the bank?
A) Statement of Profit or Loss
B) Statement of Financial Position
C) Notes to the Accounts
D) Cash Flow Statement
Ans: B) Statement of Financial Position
Relevance to US CMA Syllabus
In the US CMA (Certified Management Accountant) syllabus, journal entries play a vital role in the Financial Planning, Performance, and Analytics section. Understanding cash movements like bank withdrawal entries is crucial for budgeting, forecasting, and internal controls. This topic supports practical knowledge in preparing accurate records and financial reports aligned with US GAAP.
Cash Withdrawal From Bank Journal Entry CMA Questions
Q1. What is the impact of cash withdrawal from a bank on the cash flow statement?
A) No impact
B) Increase in investing activities
C) Increase in operating activities
D) Increase in financing activities
Ans: C) Increase in operating activities
Q2. What accounts are used in a cash withdrawal journal entry?
A) Expense and Revenue
B) Cash and Bank
C) Bank and Sales
D) Cash and Equity
Ans: B) Cash and Bank
Q3. If a company withdraws $1,500 from its bank for daily operations, what entry is recorded?
A) Bank A/c Dr. $1,500; To Cash A/c
B) Capital A/c Dr.; To Bank A/c
C) Cash A/c Dr. $1,500; To Bank A/c
D) Expenses A/c Dr.; To Bank A/c
Ans: C) Cash A/c Dr. $1,500; To Bank A/c
Q4. In which account classification do cash and bank accounts fall?
A) Income
B) Liability
C) Asset
D) Expense
Ans: C) Asset
Q5. Why is the bank account credited during a cash withdrawal journal entry?
A) A bank account is a liability
B) Bank balance decreases
C) Cash is an expense
D) Owner’s capital increases
Ans: B) Bank balance decreases
Relevance to US CPA Syllabus
In the US CPA (Certified Public Accountant) syllabus, understanding journal entries like cash withdrawals is essential under the FAR (Financial Accounting and Reporting) section. These entries ensure accuracy in financial statement preparation and cash flow management. It helps meet regulatory reporting standards and provides clarity on internal transactions within entities.
Cash Withdrawal From Bank Journal Entry CPA Questions
Q1. What happens to the asset side of the balance sheet when a business withdraws cash from a bank?
A) No change
B) Only cash decreases
C) One asset increases and another decreases
D) Liabilities increase
Ans: C) One asset increases and another decreases
Q2. A business makes a cash withdrawal from the bank. Which of the following entries is correct under US GAAP?
A) Cash A/c Dr. To Bank A/c
B) Bank A/c Dr. To Cash A/c
C) Drawings A/c Dr. To Bank A/c
D) Bank A/c Dr. To Capital A/c
Ans: A) Cash A/c Dr. To Bank A/c
Q3. Which principle is applied when recording cash withdrawal from a bank?
A) Consistency principle
B) Accrual principle
C) Matching principle
D) Double-entry principle
Ans: D) Double-entry principle
Q4. Which financial statement shows reduced bank balance after cash withdrawal?
A) Income Statement
B) Balance Sheet
C) Equity Statement
D) Notes to Financials
Ans: B) Balance Sheet
Q5. If a company withdraws $10,000 from its bank, how will this be reflected in the trial balance?
A) Debit Bank $10,000
B) Credit Cash $10,000
C) Debit Cash $10,000; Credit Bank $10,000
D) Debit Expenses $10,000
Ans: C) Debit Cash $10,000; Credit Bank $10,000
Relevance to CFA Syllabus
For CFA candidates, understanding cash movements and accounting entries like cash withdrawal from bank journal entry supports mastery in Financial Reporting and Analysis (FRA). It helps students comprehend changes in working capital, cash flow presentation, and the structure of financial statements. These concepts also link to real-world financial modeling and valuations.
Cash Withdrawal From Bank Journal Entry CFA Questions
Q1. In CFA reporting, how is a cash withdrawal from a bank treated in the cash flow statement?
A) Operating activity
B) Investing activity
C) Financing activity
D) Not reported
Ans: A) Operating activity
Q2. Which financial statement reflects changes in cash and bank balances from withdrawals?
A) Income Statement
B) Balance Sheet
C) Statement of Retained Earnings
D) Cash Flow Statement
Ans: D) Cash Flow Statement
Q3. What happens in the journal entry when cash is withdrawn from a bank account?
A) Expense increases
B) Bank asset increases
C) Cash asset increases
D) Liability increases
Ans: C) Cash asset increases
Q4. What accounting principle supports the entry: Cash A/c Dr. To Bank A/c?
A) Conservatism
B) Double-entry
C) Going concern
D) Matching
Ans: B) Double-entry
Q5. In the context of financial analysis, what does a frequent cash withdrawal suggest?
A) Improved profitability
B) Operational inefficiency
C) Strong liquidity
D) Weak working capital management
Ans: D) Weak working capital management
