The first thing you need to do is create a new cash account in Quicken. I like to call mine "Cash on Hand."
There are a few ways you would obtain cash.
1.) Cashing a check outright. In this case, you would record a deposit directly in your Cash on Hand account, making sure you selected the correct income account (just like you would if you deposited the check into your checking account).
2.) Depositing a check into your checking account and receiving some cash back. Enter your deposit as you normally would. On the very last line, select your Cash on Hand account. Enter the amount of cash you are receiving back as a negative number. Then select "Adjust Total." The total showing as a deposit in your bank account should match your deposit slip.
3.) ATM Withdrawl and/or cashing a check to yourself from your checking account. Enter a check or withdrawal like you normally would. Select your Cash on Hand account as the category.
All three of the examples above record money coming into your Cash on Hand account. Now how do you get it out?
All you need to do is open up your Cash on Hand account and record transactions just like you would in your checking account.
Because it is likely that some cash will get misplaced or spent without being tracked, it is a good idea to count how much cash you have on you on a monthly basis. Then, adjust the Cash on Hand register to reflect what you really have. In the example, I actually had $70.56 left at the end of June. So I entered an adjustment to "spend" $10.44 to bring the register to the actual amount I have. For these adjustments, since you are not sure where the money went you can put it to a miscellaneous account.
Maybe you decide that you do not want to have cash on you anymore and you put it back in the bank. All you need to do is open up your checking register and enter a deposit. For the category, select Cash on Hand. As soon as you record that deposit, you will see that your Cash on Hand has been reduced by that amount.
It takes more work to keep track of things such as cash, but if you are really trying to get a hold of your finances I would suggest giving it a try for a little while. You do get faster at it and the information you might discover could prove invaluable.