Tracking Cash Purchases

You can create an account in Moneydance to track cash withdrawals and cash purchases.

To do this, create an Asset account via Account > New Account.
 

When you withdraw cash, create a new transaction.
Create a transfer from the relevant account (e.g. checking account) into the Asset account.

This will deduct the amount from your account to represent the withdrawal.
It also increases the balance of the Asset account.

As you spend cash, enter expense transactions into the Asset account to represent the purchases.

This means that the cash you have withdrawn still counts towards your net worth until you spend it.