note on cash book
Asked by prashilanaik21 | 6th Mar, 2020, 01:37: PM
Meaning of a Cash Book:
- It is a type of subsidiary book which records only cash and bank transactions in chronological order.
- All receipts in cash (including cheque) are recorded on the debit side, whereas all payments in cash (including cheque) are recorded on the credit side of the cash book.
Features of a Cash Book:
- It records only cash and bank transactions.
- It takes care of only one aspect of the transactions, i.e., cash/bank.
- It acts as both, a journal as well as a ledger for all cash transactions.
- It is considered as a subsidiary book as it provides basis for recording transactions in the ledger.
- The balances of Cash book are directly entered into Trial Balance which shows that it may be treated as a part of ledger. Thus it may be regarded as Principal Book too.
- Simple cash book or Single column cash book (Cash transactions only): It is used for recording cash transactions only. It looks similar to an account with left-hand side for recording cash receipts and right-hand side for cash payments.
- Double-column or Two-column Cash Book: It is used for recording cash and bank transactions. It has two columns on each side, one column to record cash transactions and the other column to record bank transactions.
- Triple column cash book (Cash, bank and discount transactions): It has 3 columns on each side to record transactions involving cash, bank and discount. It is used mainly by large firms who make and receive payments in cash and bank and who frequently receive and allow discounts.
Answered by Surabhi Gawade | 6th Mar, 2020, 02:54: PM
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