In any business there are bound to be many transactions every day affecting cash. Cash sales, receipts from debtors, payments to creditors, payments to different types of expenses etc., are said to be the examples of cash transactions. Since cash transactions are frequently arise in any business big or small they are recorded in a separate book known as cash book. Cash book records transactions connected with cash. The main object of the cash book is to keep daily record of the transactions relating to receipts and payments of cash. Cash is the liquid form of an asset and every business man is interested in knowing the balance of cash at his disposal at any given time. Cash book is one among the subsidiary books. Cash book plays dual role as a book of original entry as well as ledger. In the usual course Journal entries are not passed for cash transactions but they are recorded directly in the cash book. Therefore the cash book is not only a journal for each transaction but also a ledger for cash account.
Types of Cash Book
- Simple cash book.
- Cash book with cash and discount columns.
- Cash book with cash, discount and bank columns.
Simple Cash Book
The simple cash book makes a record of only cash transactions and is just like cash account. All cash receipts are recorded on the debit side(left hand side) and all cash payments are recorded on the credit side. The specimen of simple cash book is given below.
Dr Simple Cash Book Cr
| Date | Particulars | L. F | Amount Rs. | Date | Particulars | L.F. | Amount Rs. |
Cash Book with Cash and Discount Columns: (Cash Book with Two Column)
Under this method an additional column is provided both on debit side and credit side for recording discount allowed and discount received. Discount column on the debit side represents cash discount allowed to customers and on the credit side discount column indicates discount received. Cash columns have to be balanced like other ledger accounts. Discount columns are to be totaled on their respective sides. The specimen of cash book with cash and discount columns is given below.
Dr Cash book with Cash and Discount Columns Cr
| Date | Particulars | L.F | Discount | Amount Rs | Date | Particulars | L.F | Discount | Amount Rs. |
Cash Book with Cash, Discount and Bank Columns:( Three column Cash book)
Now a days most of the traders usually open a current account with one of the banks in their locality. They deposit the surplus cash with the bank for reasons of safety and also of convenience. Money at bank is as good as cash in hand. Trader can deposit money into his bank account from time to time and can withdraw money by drawing cheques.
In moderns times banking habit has become so widespread and many payments are made and received through cheques. In such a case cash book should have a Bank column in addition to the cash and discount columns to have a record of bank account in the cash book. Such type of cash book is known as ‘three column cash book’.
