Here, you will gain knowledge about cash book, its types, features, importance and other stuff.

1. CASH BOOK
A presentation by Amreen Kaur
Class : B.Com. 1st year

2. C O N T E N T S
MEANING OF CASH BOOK
FEATURES OF CASH BOOK
WHAT'S THE PURPOSE OF A
CASH BOOK?
CASH BOOK – A SUBSIDIARY
BOOK AND A PRINCIPAL BOOK
ADVANTAGES OF CASH BOOK
DIFFERENCE BETWEEN CASH
ACCOUNT AND CASH BOOK
TYPES OF CASH BOOK
IMPORTANCE OF CASH BOOK

3. Cash book is a special type of book that is only concerned with the recording of cash
transactions of an organisation. It performs the dual role of both journal and a ledger for all the
cash transactions taking place in a business organisation.
A cash book records all the cash receipts on the debit side and all the cash payments of the
organisation on the credit side.

4. Sample
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Text
# Acts as both a journal and a ledger.
# Can be used as an alternative to a cash account for recording transactions.
# It follows the dual entry system of accounting (i.e. Debit and credit side in cash book).
# The debit side should be identical to the credit side.
# Cash book should always have a debit balance.
# Only cash/ bank transactions are recorded in cash book.
# Transactions are recorded in chronological order.
# Cash books are balanced daily.

5. W H AT ’ S T H E P U R P O S E O F C A S H
B O O K ?
Sample
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Text
A cash book is set up as a subsidiary to the general ledger in which all
cash transactions made during an accounting period are recorded in
chronological order. The primary goal of a cash book is to manage cash
efficiently, making it easy to determine cash balances at any point in time,
allowing managers and company accountants to budget their cash
effectively when need be. It is also much faster to access cash
information in a cash book than by following the cash through a ledger.

6. Cash and bank transactions are
recorded in the Cash Book and
based on 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.

7. A D VA N TA G E S O F C A S H B O O K
It prevents duplication of work in entering cash transactions in journal and
then posting the same into ledger .
Cash and bank transactions (both) can be recorded in cash book.
It is possible to find out daily cash and bank balance .
Because cash and bank accounts are out of the main ledger , it keeps the
general ledger of manageable size.
Cash book also serves the purpose of book of original entry as well as ledger.
Frauds involving cash are likely to be minimized and where frauds have been
committed, are likely to be detected at an early stage.

8. D I F F E R E N C E B E T W E E N C A S H A C C O U N T
A N D C A S H B O O K
No. CASH ACCOUNT CASH BOOK
1 It is an account in ledger. It is a separate book of accounts forming
part of accounting system.
2 Cash account is part of ledger. Cash A/C is
opened in the ledger in which posting is done
from some book of original entry i.e., Journal.
Cash book records entries directly from
transactions and there is no need for a book
of prime entry.
3 In cash account posting is not followed by
narration.
In cash book entries are followed by
narration also.
4 It only records one aspect of transaction
involving cash and bank.
It records both the aspects of this
transaction in cash and bank column to
complete double entry posting.
5 A column for Journal Folio is provided. A column for Ledger Folio is provided.

9. Single column cash book
Double column cash book
Triple column cash book
Multicolumn cash book
Petty cash book
Imprest system

10. S I N G L E C O L U M N
C A S H B O O K
• This is also known as a Simple Cash Book. This cash book will
only record cash transactions. The cash coming in (receipts) will
be on the left and the cash payments will be on the right. And
since we will record all cash transactions here there is no need for
a cash ledger account.
• Now since there is only one column, we do not record bank
transactions in this cash book. Any discounts given will also not
feature here. We will record bank and discount transactions in
their separate ledger accounts.
• Cash books are balanced quite frequently. In fact, most
companies balance their cash book daily. One important point to
remember is that the cash book can never have a credit balance.
Cash books only show a debit balance.

11. D O U B L E C O L U M N
C A S H B O O K
• Here instead of one column, we have an additional
column for discounts. So along with the cash
transactions, we will also record the discounts in the
same cash book. So, both discounts received and
the discount that is given is recorded here. If any
organization is in a general practice of giving or
receiving discounts this is the preferable option.
• Discount is a nominal account – so the discount is
given (loss) is on the debit side and discount
received (profit) is on the credit side. At the end of
the period, we balance both columns and transfer
the closing balances.

12. T R I P L E C O L U M N
C A S H B O O K
• This cash book has the cash, the discount and
additionally the bank columns in it. Since the
development of banking most firms, these days prefer to
deal in cheques or other such bills of exchange. And so
having a bank column in your cash book makes things
concise and simpler to understand.
• So, when you receive a cheque and you deposit it in the
bank the same day you make the entry in the bank
column (the debit side in this case). But say you send
the cheque later (not the same day) then this will be a
contra entry. A contra entry is transactions that happen
between a cash account and a bank account. Ultimately
your Cash & Bank balance remains the same, the
money just moves around.

13. M U LT I C O L U M N C A S H B O O K
• Multi column cash book is usually maintained by large business enterprises. The receipt and payment sides
of this book are divided into such columns which are frequently needed for meeting cash transactions such
as cash sales, printing and stationery, salaries, wages, miscellaneous receipts, miscellaneous expenses
etc. In this way posting of cash transactions occurring again and again is not required, only posting of the
total of various columns is made in their respective accounts .
Dr. MULTICOLUMN CASH BOOK Cr.
Date Particulars L.F. Amount Date Particulars
L.F
. AMOUNT
Cash
Sales
Printing &
Stationery Salaries Cash Sales
Printing &
Stationery Salaries

14. P E T T Y C A S H B O O K
• In a firm, there are usually cash transactions
happening in all the departments. These we will
record in one of the above formats of cash books.
But there are many cash transactions happening for
very small amounts. Sometimes there are dozens
of such transactions that occur in just one day.
These are known as petty transactions. Examples
are expenses for postage, stationery,
traveling, food bills, etc.
• So, since the number of such transactions tends to
be very high, we maintain a separate cash book for
them – the petty cash book. Such a cash book is
maintained by the petty cashier (who in most cases
also handles the petty cash).

15. I M P R E S T S Y S T E M
P E T T Y C A S H B O O K
In this system, the petty cashier is entrusted with a
specified amount at the beginning of every month,
fortnight or week. The cashier makes payment out of
the amount granted to him. At the month end the petty
cashier, after making payments from the amount,
gives the payment voucher to the main cashier, who
reimburses the amount to the petty cashier at the end
of the month. So, the petty cashier will have the same
fixed amount at the beginning of the next period.
This system is called the Imprest system of petty
cash and the amount so granted is termed as a float.
The amount of float is decided in such a manner, that
it may be sufficient to meet petty expenses, for the
stipulated term. The balance left in the petty cash
book indicates the amount remaining with the petty
cashier.

16. I M P O R T A N C E O F C A S H B O O K
Total cash receipts and payments of the business are easily
known at any time from the cash book.
 The amount of cash in hand may be known at any time
Since the Cash Book is both a Journal and a Ledger, it is possible
to take advantage of both the Journal and Ledger from the Cash
Book.
 Since all cash transactions are recorded in one place in the cash
book, it is not difficult to obtain any information about the cash
transaction in the future.

17. I M P O R T A N C E O F C A S H B O O K ( C O N T I N U E D )
 It is very easy to calculate the amount of cash in hand at any time from the cash book, and
it can be compared to the money in the cash box so that the accuracy of the account and
any kind of fraud can be easily caught.
 Maintaining cash books can help prevent labour and time loss.
 Cash security can be ensured as the cash balance of the cash book must be reconciled
with the cash balance of the fund.
 It’s easy to detect any errors, as all cash transactions are recorded in the cash book.
 The cash book shows the amount of money that’s lying idle in the business. As a result,
idle cash can be invested at any time in any other business.

18. S U M M A R Y
•A cash book is a subsidiary of
the general ledger in which all
cash transactions during a
period are recorded.
•The cash book is recorded in
chronological order, and the
balance is updated and
verified on a continuous basis.
•A cash book differs from a
cash account in that it is a
separate ledger in which cash
transactions are recorded,
whereas a cash account is an
account within a general
ledger.