Accounting: Meaning of Cash Book and Different Types of cash Book: Simple, Bank Column and Petty Cash Book

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Cash Book

  • Every business transaction is recorded in Journal Book. Single Book will be maintained if there are limited transactions. If the number of transactions is more, maintaining all the transactions in single book is inconvenient. Journal needs to be divided into many books based on nature of the transaction. Cash book for cash transactions, Sales Book for credit sales, Purchase book for credit purchases and so on. Cash book is having very importance in business.

  • Cash Book is a book in which all cash receipts and cash payments are recorded.

  • It starts with the cash or bank balance at the beginning of the period.

  • For new business there will be no cash balance.

  • Cash book can be classified into three books.

  • Simple Cash Book

  • Bank Column Cash Book

  • Petty Cash Book

Simple Cash Book

  • It records only cash receipts and cash payments.

  • All cash receipts are recorded on the debit side (left side).

  • All cash payments are recorded on the credit side (right side).

  • At the end of the month, cash book is balanced as account is balanced in the ledger.

  • The difference if any is entered on the credit side of the cash book under the particulars column as balance C/D.

  • The closing balance of the credit side becomes the opening balance for the next period and is written as Balance b/d on the Debit side.

Format of Simple Cash Book

Table Supporting: Simple Cash Book

Tablutation of: Dr., Cr.

Dr.

Cr.

Date

Particulars

L.F.

Amount (Rs.)

Date

Particular

L.F

Amount(Rs.)

Column-Wise Explanation

  • Date: In this column Year, Month and Date of transactions are recorded in chronological order.

  • Particulars: In this column, the name of the account in respect of which cash has been received or payment has been made is written.

  • L.F (Ledger Folio): In this column, the page number of the ledger book on which relevant account is entered.

  • Amount: It records the amount received on debit side and cash paid on its credit side.

Example:

Prepare Cash Book for the month of April 2006 and also post them into ledger.

Table Supporting: Column-wise explanation

Tablutation of: Date , Details , Amount (Rs.)

Date

Details

Amount (Rs.)

2006

April 01

Cash in hand

17600

April 03

Purchased Goods for cash from Rena

7500

April 06

Sold Goods to Rohan

6000

April 10

Wages paid in cash

500

April 15

Cash paid to Neena

3500

April 17

Cash Sales

10000

April 19

Commission paid

700

April 21

Cash received from Teena

1500

April 25

Furniture Purchased for cash

1700

April 28

Rent paid

3000

April 30

Paid Electricity bill in cash

1300

Solution:

Cash Book

Table Supporting: Column-wise explanation

Tablutation of: Dr., Cr.

Dr.

Cr.

Date

Particulars

L.F.

Amount (Rs.)

Date

Particular

L.F

Amount(Rs.)

2006

Apr 01

Apr 17

Apr 21

May 01

Balance b/d

Sales A/c

Teena A/c

Balance b/d

17600

10000

1500

2006

April 03

Apr 10

Apr 15

Apr 19

Apr 25

Apr 28

Apr 30

Apr 30

Purchases A/c

Wages A/c

Neena A/c

Commission A/c

Furniture A/c

Rent A/c

Electric Bill A/c

Balance c/d

7500

500

3500

700

1700

3000

1300

10900

29100

29100

10900

Posting of Cash Book in the Ledger

  • Account appearing on the debit side of the Cash Book is posted on the credit side in the relevant ledger.

  • Account appearing on the credit side of Cash Book is posted on the debit side of the relevant ledger.

Note: Cash Book itself is a Cash Account. So, no need of separate Cash A/c will be maintained in the ledger.

Bank Column Cash Book

If the number of bank transactions is large organization need to maintain separate journal book as Bank Book. Instead of having separate Bank Book a column is added on each side of the Simple Cash Book. This type of Book is called as Bank Column Cash Book.

  • All payments into the bank are recorded on the debit side.

  • All withdrawals/payments through the bank are recorded on the Credit Side.

Format of Bank Column Cash Book

Table Supporting: Bank Column Cash Book

Tablutation of: Dr., Cr.

Dr.

Cr.

Date

Particulars

L.F.

Cash

(Rs.)

Bank

(Rs.)

Date

Particular

L.F

Cash (Rs.)

Bank (Rs.)

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