Chapter 11: Books of Original Entry – Cash Book
Each subsidiary book is meant for recording all the transactions of a similar nature. For example, all cash transactions may be recorded in one book, all credit transactions in another book.
Thus, the subsidiary books may be defined as books where the transactions are entered first and ledger accounts are prepared on their basis.
Advantages of Special Purpose Subsidiary Books:
Division of work according to ability: Since there will be eight subsidiary books in place of one journal, the accounting work can be divided among different persons according to their ability.
Increase in Efficiency: Because each person is entrusted the work of a particular book over a period of time, he becomes efficient in handling it.
Easiness in Posting: Since all transactions of a particular nature are already collected at one place, it facilitates the posting into the ledger.
Easiness of Checking: In case the trial balance does not agree, the existence of separate books helps in the detection of errors quickly.
Protection from Frauds: If only one book, Journal is maintained, only one person will be in charge of it. In such a case it is easier to commit a fraud.
Full information at one place: By the use of subsidiary books classified information in the form of cash receipts, cash payments, cash balance, credit purchases etc. is readily available at one place.
Flexible: It is not necessary for every business firm to use all the eight books. The number of books can be increased or decreased according to the needs of the particular business.
Fixation of Responsibility: Each employee is entrusted with a particular subsidiary book, and as such, he can be held responsible for the errors committed in that very book.
CASH BOOK
Meaning and importance: – This book is used to record all transactions relating to cash receipts and cash payment. The book enables a businessman to know the balance of cash in hand and at bank at any point of time. It also gives information about the daily receipts, payments and the closing cash balance at the end of each day.
Cash Book: – A Subsidiary Book and a Principal Book
Cash book achieves a dual purpose. When a cash book is maintained, transactions of cash are not recorded in the journal. As all the cash transactions are recorded for the first time in the cash book. But when a cash book is prepared, cash account in the ledger is not prepared.
Distinction between Cash A/c and cash Book
| Cash A/c | Cash Book | ||
| 1
2
3
4
|
It is an account in a ledger
Cash account is opened in the ledger and posting is done in this account from journal.
When transactions of cash are recorded in journal, it is necessary to open a Cash A/c in ledger.
It only records one aspect of a transaction i.e. Cash. |
1
2
3
4 |
It is a separate book maintained for recording cash transactions.
It is book of original entry because all cash transactions first of all recorded in cash book and then posted from cash book to various accounts in the ledger. When transactions of Cash are recorded in Cash book, there is no necessity to open a Cash A/c in the ledger It records both the aspects of a transaction. |
Cash Book is a Journalized Ledger: The Cash book is also a ledger in the sense that it serves the purpose of Cash account also. When a Cash Book is prepared, no separate cash account is opened in the ledger.
Similarities of cash Book with Journal
- Transactions in Cash book are recorded for the first time from source documents.
- Transactions in the Cash book are recorded date wise.
- Transaction in the Cash book are also posted to the relevant accounts in the ledger.
- A Cash book also contains a ledger Folio column.
Similarities of Cash Book with Ledger
- It has two equally divided sides having identical columns. The left side is the debit side and the right side is the credit side.
- Cash book itself serves as a Cash account also and as such when a Cash book is maintained. Cash account is not opened in ledger.
- The word ‘To’ an ‘By’ are used in a cash book also.
- It is balanced just like a ledger account.
Advantage of Maintaining a Cash Book
- When a Cash book is maintained, no separate ‘Cash Account’ is opened in a ledger. Hence, it prevents duplication of work in recording.
- Since Cash Account is not opened in the ledger, it prevents the size of the ledger from becoming two voluminous.
- Both Cash and bank transactions can be entered in the Cash book.
- It enables a businessman to know the balance of Cash in hand and at bank at any point of time without waiting for posting from the journal.
- It gives information about daily receipts, payments and the closing Cash and bank balance at the end of the day.
- The Cash balance, as shown in Cash book, must equal to the actual cash in hand.
Types of Cash Book:
Single-Column Cash Book (Simple Cash Book):Records only cash receipts and cash payments. It’s the simplest form and doesn’t include bank transactions or discounts.
Has one amount column on both the debit side and the credit side.
Typically used by very small businesses or individuals who primarily deal in cash.
FORM OF SINGLE COLUMN CASH BOOK
| DATE
|
PARTICULARS | V.NO.
|
L.F
|
AMOUNT
|
DATE
|
PARTICULARS
|
V.NO.
|
L.F
|
AMOUNT
|
|
|
|
Double-Column Cash Book (Two-Column Cash Book):Records both cash and bank transactions. Some variations might include cash and discount columns, or bank and discount columns.
Has two amount columns on each side. Common variations include:
- Cash and Bank Columns: One column for cash transactions and another for bank transactions. This is very common for businesses that handle both cash and bank operations.
- Cash and Discount Columns: One column for cash and another for cash discounts allowed and received.
FORM OF DOUBLE COLUMN CASH BOOK
| DATE | PARTICULARS | V.NO.
|
L.F
|
CASH
|
BANK
|
DATE
|
PARTICULARS
|
V.NO
|
L.F
|
CASH
|
BANK
|
|
|
|
Petty Cash Book:Used to record small, day-to-day expenses that are impractical to record in the main cash book, e.g., postage, stationery. This keeps the main cash book from becoming cluttered with numerous small entries.
FORM OF PETTY CASH BOOK
|
DR. CR. |
Analysis of Payments
|
|||||||||
| Amount
Received |
Cash Book Folio
|
Date
|
Particulars
|
V.no
|
Total payments
|
Postage
& Courier
|
Wages
|
Conve-
yance
|
Station
ary
|
Mis.-
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
SINGAL COLUMN CASH BOOK
| Date | Particulars | V.no. | L.F | Amount (Dr.) | Date | Particular | V No. | L.F | Amount (Cr.) |
| Jan 1 | To Balance b/d (Opening Cash) | 5,000 | Jan 5 | By Rent Paid | 1,000 | ||||
| Jan 3 | To Sales (Cash Sales) | 2,000 | Jan 10 | By Purchases (Cash Purchases) | 1,500 | ||||
| Jan 15 | By Salaries | 800 | |||||||
| Jan 31 | By Balance c/d | 3,700 | |||||||
| Total | 7,000 | Total | 7,000 |
DOUBLE CO;UMN CASH BOOK (CASH AND BANK)
| Date | Particulars | V.no | L.F. | Cash Dr. | Bank Dr. | Date | Particulars | V.no | L.F. | Cash Cr. | Bank Cr. |
| Jan 1 | To Balance b/d | 10,000 | 50,000 | Jan 5 | By Purchases | 2,000 | |||||
| Jan 3 | To Sales | 5,000 | Jan 8 | By Bank (Cont.) | 5,000 | ||||||
| Jan 4 | To Cheque from David | 15,000 | Jan 10 | By Rent | 1,200 | ||||||
| Jan 8 | To Cash (Cont.) | 5,000 | Jan 12 | By Salaries | 1,500 | ||||||
| Jan 31 | By Balance c/d | 11,500 | 58,800 | ||||||||
| Total | 20,000 | 65,000 | Total | 20,000 | 65,000 |
PETTY CASH BOOK
Transactions for the month of July 2025:
| Date (July 2025) | Transaction | Amount (₹) |
| 1 | Received fund from Chief Cashier | 5,000 |
| 3 | Paid for postage stamps | 250 |
| 5 | Purchased office stationery | 400 |
| 7 | Paid bus fare for delivery boy | 120 |
| 10 | Bought refreshments for staff meeting | 300 |
| 12 | Paid for cleaning supplies | 180 |
| 15 | Paid for courier charges | 150 |
| 18 | Paid for minor repairs to office chair | 200 |
| 22 | Purchased new pens and notepads | 220 |
| 25 | Paid for taxi fare for manager | 280 |
| 28 | Paid for tea/coffee supplies for pantry | 170 |
| 30 | Paid for replacing a faulty light bulb | 90 |
Solution:For the month ended July 31, 2025
| Amount Received (Dr.) | C.B.F. | Date | Particulars | V No. | Total Paid (Cr.) | Analysis of Payments |
| Postage & Courier | ||||||
| 5,000 | 1 | July 1 | To Cash (Imprest Fund Received) | |||
| July 3 | By Postage Stamps | 001 | 250 | 250 | ||
| July 5 | By Office Stationery | 002 | 400 | |||
| July 7 | By Bus Fare | 003 | 120 | |||
| July 10 | By Refreshments (Staff Meeting) | 004 | 300 | |||
| July 12 | By Cleaning Supplies | 005 | 180 | |||
| July 15 | By Courier Charges | 006 | 150 | 150 | ||
| July 18 | By Minor Repairs (Office Chair) | 007 | 200 | |||
| July 22 | By Pens & Notepads | 008 | 220 | |||
| July 25 | By Taxi Fare | 009 | 280 | |||
| July 28 | By Tea/Coffee Supplies | 010 | 170 | |||
| July 30 | By Light Bulb | 011 | 90 | |||
| Total Payments | 2,360 | 400 | ||||
| July 31 | By Balance c/d | 2,640 | ||||
| 5,000 | Total | 5,000 | ||||
| 2,360 | 2 | Aug 1 | To Cash (Reimbursement) | |||
| 2,640 | Aug 1 | To Balance b/d (Opening Cash for Aug) |