Southern Business School (SBS)

Institute of Southern Punjab Multan

Assignment No: 8

Due Date: 23-6-20

Class: BBA 3rd Semester

Section: A

Subject: Financial Accounting

Student Name: Muhammad Rizwan

Complete Registration No: BBA-021R19-5

Submitted To: Mam Sonia Hassan

Question: no: 1

Explain the concept of cash book and petty

cash.
Cash book

The cash book is used to record receipts and payments of cash It works as a book of
original entry as well as a ledger account The entries related to receipt and payment
of cash are first recorded in the cash book and then posted to the relevant ledger
accounts Moreover a cash book is a substitute for cash account in the ledger A
company that properly maintains a cash book does not need to open a cash account
in its ledger

Types of cash book

There are four major types of cash book that companies usually maintain to account
for their cash flows these are given below

A single column cash book to record only cash transactions

A double/two column cash book to record cash as well as bank transactions
A triple/three column cash book to record cash bank and purchase
discount and sales discount
A petty cash book to record small day to day cash expenditures

Petty Cash Book

Petty Cash Book is maintained to record small expenses such as postage stationery
telegram A separate column is allotted for each type of expenditure The difference
between the total of the debit items and that of the total column on the credit
represents the balance of the petty cash in hand

Explanation

Generally in all business houses payments are made by cheque for battery control
over
cash But the payment of small expenditures like stationery traveling postage
telegrams office teas and newspapers by cheque are impartial Besides the above
 Question: no: 2
mentioned problem the chief cashier of a larger business has to deal with numerous
transactions of large amount daily If the chief cashier records petty expenses in
main cash book then chief cashier and main cash both will be overburdened

To solve these problems the chief cashier delegates responsibilities to some senior
staff member for day to day small transactions For this purpose he is given a small
amount and a separate book to record these small payments The book in which these
small payments are recorded is called Petty Cash Book The found that is used for
small payments is known as Petty Cash and the person who is responsible for
makings small payment and recording them is called Petty Cashier
 Explain the difference between Reconciliation
of Control Accounts and Bank Reconciliation
Statement.
Reconcile control accounts

Both the receivables and payables control accounts should be balanced regularly
and the balance agreed to the sum of the balances on the memorandum ledgers the
receivables ledger and the payables ledger respectively

Therefore, if the balances in the receivables/payables ledgers are added up they

should agree to the RLCA/PLCA balances If not an error must have occurred at the
same point in the system

Bank Reconciliation

A bank reconciliation statement is a document that matches the cash balance on a

company’s balance sheet to the corresponding amount on its bank statement
Reconciling the two accounts helps determine if accounting changes are needed Bank
reconciliations are completed at regular intervals to ensure that the company’s cash
records are correct They also help detect fraud and any cash manipulations