CASH BOOKS AND THEIR KINDS
CASH BOOKS AND THEIR KINDS
Cash Book is a book of prime entry in which cash and bank transactions are recorded in chronological order, i.e., as they occur. Cash receipts are recorded on the debit side of the Cash Book and cash payments on the credit side. Cash transactions in a firm are generally numerous, therefore, it is convenient to maintain separate Cash Books.
Features of Cash Book
- Only cash and bank transactions are recorded in the Cash Book.
- Cash and cheque receipts are recorded on the debit side while cash and cheque payments are recorded on the credit side.
- It records only one aspect of the transaction, i.e., cash or bank.
- Cash and bank transactions are recorded in the Cash Book in chronological order, i.e., in the order they take place.
- It performs the function of both Journal and the Ledger at the same time
Cash Book—A Subsidiary Book and a Principal Book:- Cash and bank transactions are recorded in the Cash Book and on the basis of such records, Ledger Accounts are prepared. Therefore, Cash Book is a Subsidiary Book. At the same time, Cash Book by itself is Cash Account and Bank Account. As a matter of fact, the balances are entered in the Trial Balance directly. Cash Book, therefore, is a part of the Ledger also. Hence, it is also a Principal Book. Cash Book is, thus, both a Subsidiary Book and a Principal Book.
Kinds of Cash Books:- There are
three types of Cash Books:
1. Simple
Cash Book or Single Column Cash Book-- For recording cash transactions
only.
2. Double-column
or Two-column Cash Book: For recording cash and cash discount transactions.
3. Triple-column
or Three-column Cash Book: In this cash book there are three columns of
amount on both sides. The first for discount, the second for cash, and the third
for bank transactions. Discount allowed on payment received is recorded on the
debit side, while discount received on payment made is recorded on the credit
side.
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