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Ankita Priyadarshini Cash Book
Ankita Priyadarshini Cash Book
Ankita Priyadarshini Cash Book
ON
PREPARATION OF CASH BOOK
SUBMITTED BY:
GUIDED BY:
MISS PRARTHANA MISHRA
DEPARTMENT OF COMMERCE
KAMALA NEHRU WOMEN`S HIGHER SECONDARY SCHOOL,
SESSION: 2020-22
BHUBANESWAR
Authorized Signatory
Ankita Priyadarshini
Roll No : IC20-015
ACKNOWLEDGEMENT
Ankita Priyadarshini
1. Introduction 01
2. Features 02
5. Objective 05
6. Methodology 05
7. Problem Statement 07
8. Conclusion 09
9. References 10
Introduction:
Cash book may be describe as a primary book meant for recording all
cash (including bank) transactions date-wise. It also servers the purpose of
ledger. The need for a separate cash book is important because of the
following reasons :
Features:
1. Cash column must have debit balance (if any) whereas bank column
may have debit or credit balance depending upon whether bank
balance is positive or overdraft.
2. It is a book of original entry and a book of final entry, so, it performs
the role of journal and ledger.
3. Receipts are recorded on debit side and payments on credit side.
4. It records only one aspect of the transaction i.e. cash and bank;
double entry is completed by means of posting in the ledger to the
respective account.
5. Transactions are being recorded in chronological order.
The Cash Book is set up in columns. There are three common versions of
cash book and they are :
This is the most simple form of cash book which keeps a record of
only cash transaction. This is also known as simple cash book. A single
column cash book has only one money column on the debit and credit sides
to record cash transactions. This is the reason why it is called a single
column cash book (or a simple cash book).This form of cash book has the
same ruling as that of a ledger account. There is no need of having a cash
account in the ledger. The purpose is ably served by cash book itself.
Posting form debit (receipt) side of the cash book is done to the credit side of
concerned accounts and from the credit side of cash book to the debit side
of concerned accounts.
In order to prepare a cash book here we are going to discuss about some of
the practical problems and about its solution as per our syllabus. Here we
take the problem example and its solution as referred in our book of
Accountancy. Here we are using Triple Column Cash Book method to
prepare cash book for any business enterprise.
Problem 1: On May 1 2021 Ramesh had ₹2,750 in his cash box and was
overdraws at the bank by ₹27,065. Enter these opening balances in his cash
book and then record the following transactions. Balance of the cash book
on May 15.
2021
May 2 Paid for postage stamps ₹260 in cash, paid for repairs ₹147 in cash,
paid to Rakesh a cheque for ₹2,710, who gave discount ₹190.
May 3 Cash sales ₹8,770; paid ₹5,030 out of cash box into the bank.
May 8 Bought goods by cheque at an auction ₹1750; paid rent for the
month ₹2,950 by cheque; paid ₹1,000 in cash.
May 13 Rates paid by cheque ₹2,265; drawn for personal use from cash box,
₹1,500.
Solution:
From the above study it is found that the total cash receipts and payments
of the business are easily known at any time from the cash book. The
amount of cash in hand may be known at any time without having to count
the cash box if the cash book is properly maintained. Since the Cash Book
is both a Journal and a Ledger, it is possible to take advantage of both the
Journal and Ledger from the Cash Book. Since all cash transactions are
recorded in one place in the cash book, it is not difficult to obtain any
information about the cash transaction in the future.I t is very easy to
calculate the amount of cash in hand at any time from the cash book, and it
can be compared to the money in the cash box so that the accuracy of the
account and any kind of fraud can be easily caught. The cash book may also
be used to preserve the initial and accurate accounts of cash transactions.
Maintaining cash books can help prevent labor and time loss. Cash security
can be ensured as the cash balance of the cash book must be reconciled
with the cash balance of the fund. It’s easy to detect any errors, as all cash
transactions are recorded in the cash book. The cash book shows the
amount of money that’s lying idle in the business. As a result, idle cash can
be invested at any time in any other business. If the cash book is
maintained properly, the preparation of the Journal and Ledger may be
avoided. Since all types of cash transactions are recorded in the Cash Book,
any cash transaction information relating to expenses is available from the
Cash Book at any time in the future.As soon as cash transactions are
completed, they can be recorded directly in the cash book without entering
the journal book. As a result, the organization does not need to prepare a lot
of journal entries.
All the owners of the business give strict orders to the accountants to
balance cash funds on a daily basis in the business. As a result, a business
organization can find out the amount of its cash on a daily basis.
REFERENCES