Cash Book

Cash Book
It is a subsidiary book in which all cash transactions are recorded in a
chronological order.
{Cash transaction → Cash receipt and cash payment}

Note:
a. All cash receipt are recorded on the debit side
b. All cash payment are recorded on the credit side

Features of cash book

I. It serves the purpose of both journal and ledger (book of original entry)
II. All the cash transactions are recorded in chronological order
III. All the cash receipts are recorded in debit side
IV. All cash payments are recorded in credit side

Types of Cash Book

➢ Single column cash book (simple cash book)
➢ Double column cash book (two column cash book)
a. Cash and bank column
b. Cash and discount column
➢ Three column cash book
a. Cash, Bank and Discount column
➢ Petty cash book (cash book for small payment)

Simple cash book

It is a type of cash book containing only one amount column on each side (debit
and credit) for recording cash transactions.

Note:
➢ The debit side is used to record cash receipt
➢ The credit side is used to record cash payment
➢ It is used for recording small payments which does not allow or receive cash
discount
➢ Business does not have bank A/c

Format
Dr Simple Cash Book Cr
L L
Date Particulars Rs Date Particulars Rs
F F
To balance b/d Cash payment
(opening balance)
Cash Receipts By balance c/d
(closing balance)

Two Column Cash Book or Double Column Cash Book

The cash book which contains two amount columns for cash and bank on both the
sides (Debit and Credit) is called Double Column Cash Book. The business men can
record all the banking transaction and cash transaction in double column cash book.

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 Cash Book
Note: Cash book serves as both journal and ledger. Cash book is a book of original
entry (first entry) and it is also a principal book. It serves the purpose of both journal as
well as ledger. The cash book serves as a cash account, because it is prepared like a
ledger account.

Format:
Dr Double Column Cash Book Cr
L Cash Bank L Cash Bank
Date Particulars Date Particulars
F Rs Rs F Rs Rs

Features of two column cash book

I. All cash payments are recorded on credit side, all cash receipts are recorded on
debit side.
II. It serves as a original entry (Journal)
III. It serves as a cash account (Ledger)
IV. Bank charges and interest on overdraft are recorded on credit side in bank column
V. Interest allowed by bank and deposited by third party to the bank A/c are
recorded on Debit side in Bank column
VI. The transaction which affects both cash and bank are recorded on both the sides
of the cash book (contra entry)

Contra Entry
The entry made on both the sides of the cash book (double column) for a transaction
which affects both cash and bank is called Contra Entry.
Example:
➢ Cash deposited into bank
➢ Cash withdrawn from bank for office use
Note: Against contra entry, the Letter “C” is written in LF column.

Cash or Cheque deposited into bank

Bank A/c Dr
To Cash A/c

Dr Double Column Cash Book Cr

L Cash Bank L Cash Bank
Date Particulars Date Particulars
F Rs Rs F Rs Rs
To Cash A/c C xxx By Bank A/c C xxx

Cash withdraw from bank for office use

Cash A/c Dr
To Bank A/c

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 Cash Book
Dr Double Column Cash Book Cr
L Cash Bank L Cash Bank
Date Particulars Date Particulars
F Rs Rs F Rs Rs
To Bank A/c C xxx By Cash A/c C xxx

Petty Cash Book

It is a type of cash book used to record small expenses such as postage, coolie,
stationary, printing, refreshments etc.,

Advantages of Petty Cash Book

➢ It relief the chief cashier from the burden of recording frequent small payments.
➢ The scope of fraud is reduced (petty cashier is accountable to chief cashier)
Note: Chief cashier verifies petty cash book along with vouchers.

Imprest system of petty cash book

Under this system, the petty cashier is given a fixed sum of money in the beginning of
the month or week called Imprest system.
Note: The petty cashier is again given an amount equal to the amount spent by him so
that in the beginning of the next month or week he has the same amount.

Advantages of Imprest System

➢ Control over petty expenses
➢ Misuse of cash from petty cashier is difficult

Methods of preparing petty cash book

I. Simple petty cash book
II. Analytical petty cash book

Simple petty cash book

It is a cash book containing one amount column to record all kinds of small
payment.

Analytical petty cash book

The cash book containing separate amount column for each class of small
expenses is called analytical petty cash book.
Format:
Petty Cash Book
Amount Amount Analysis of Payments
Voucher Coolie,
Received Date Particulars Paid
No. Postage &
conveyance
Printing & Refreshment cartage
Misc
Rs Rs Telephone Stationery and
carriage

xxx xxx xxx xxx xxx xxx xxx

Balance c/d xxx
xxx xxx
xxx Balance b/d

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