Cash Book

The number of cash transactions are more so it is convenient to put them in one particular book separately. Cash book records cash as well as bank transactions. Cash transactions are recorded in the cash column and bank transactions are recorded in the bank transactions are recorded in the bank column. A balance of cash column as well as bank column is found out by calculating the difference between total payments from total receipts.

Cash Book – A subsidiary Book and Principal Book

Cash and bank transactions are recorded in the cash book and on the basis of such record, Ledger Account are prepared. Hence, cash book is a subsidiary Book. The balance of cash booki.e. cash and bank is directly so it is a Principal Book. Cash book is both a subsidiary as well as Principal Book.

Kinds of Cash Book

1. Simple Cash Book or Single Column CashBook
   1. Two- column or Double column CashBook
   2. Triple – Column Cashbook
2. Petty CashBook
   1. simple petty Cashbook
   2. Analytical petty Cashbook

a) Simple Cash Book or Single Column Cash book

Dr.                                                                                                                                                                                                                          Cr.

-------------Receipt side-----------------------------------I---------------------------Payment------------------------------------------------------

Cash Book is in a way, a cash account with debit and credit side and Cash account is an asset account, so the rule followed is Increase in assets to be debited and Decrease in asset is to be credited.When cash book is maintained, cash account is not opened in the ledger.

It does not record-

• Non cashtransactions
• Discount received orgiven
• Cheque accepted ordrawn

Cash account does not have a credit balance as payment of cash cannot be more than receipt of cash.

Examples-

• Business commenced with Rs.50,000.
• Purchased goods worth Rs. 10,000 forcash.
• Wages worth Rs. 15,000paid
• Cash sales made Rs.10,000
• Proprietor withdrew 20,000 for personaluse.
• Stationary expenses worth Rs.5,000

Dr.                                                                                                                                                                                                            Cr

Dr.                                                                                                                                                                                                                              Cr

--------------Receipt side--------------------------------I----------------Payment Side---------------------------------

Bank column can have both debit and credit balance Dr balance – bank balance

Cr balance – bank overdraft Treatment oftransactions-

(i)Opening balance

1. Receipt ofcheques

1. Contraentries

1. Endorsement ofcheque

1. Bankcharges

Opening Balance

The opening cash and bank balances are recorded on the debit side of the cash book. Sometimes a businessman withdraws excess amount from the bank (from his bank account) and the closing bank balance of a month is a credit balance. This balance amount is called ‘Bank overdraft’.

Receipt o Cheques

All cash receipts are entered in the cash column and cheques received in the bank column of Cash Book. If the cheques deposited in bank on the same date, it is entered on the debit side of bank column of the cash book.

If the cheques received from customer are not deposited in the bank on same day, they are included in cash and written on the debit side in the cash column of cash book or is not shown in the cash book at all as it is recorded as Cheque in hand.

Contra entry

A transaction which consists of both cash as well as bank is termed as contra entry.

• Cash deposited inbank

• Cash withdrawn frombank

Endorsement of Cheque

Transferring of cheque received from one person to another is termed as endorsement

e.g cheque received from Ram Rs. 10,000 transferred to Sham.

Bank Charges

Whenever an entity avails the services of bank, then bank charges for their service. It is called Bank Charges.

It is written on the credit side of the cash book and the amount is entered in the bank column.

e.g. Bank charges Rs. 200

Petty Cash Book

Petty cash book records all the expenses that involves small amounts. Other than petty cash, the amount received from the main cash is also recorded is also recorded here.

• System of petty cash

Ordinary System-

No specific amount of petty cash is kept. The amount is taken from main cash as & when required

Imprest System

This system of petty cash involves payment of a specific amount in advance in the beginning and such amount is reimbursed from time to time

Types of petty cashbook

Simple Petty cashbook

A simple petty cash book is identical with the cash book.

Analytical Petty Cash Book