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Cash Book

The cash book which is also referred to as one of the day books of original entry is more than a record of cash and cheque transactions. It is also a book of accounts. It uses the double-entry system similar to an account in a ledger. Cash and cheques received are debited on the left-hand side and cash and cheques used for payments are credited on the right-hand side.

It pays to bear this in mind:
Debit the cash book whenever cash and cheques are received.
Credit the cash book whenever cash and cheques are paid out.

The cash book is a ready record that makes known what and how much have been received, and what and how much have been paid. There is however certain information like the bank charges and interest which can only be known when the bank account statement is received as the bank does not issue invoices.

At the end of each period which is usually a month, the cash book is balanced to determine the closing balance which is the amount of cash available as well as the cash available or otherwise in the bank account. Balancing the book is done by inserting an amount equal to the difference between the debit and credit sides in the side whose total is lesser so that the debit and credit totals are equal. The closing balance carried down (c/d) is brought down (b/d) to the next period as the opening balance.

The cash book has a number of formats, the most common of which shows cash and bank transactions in separate columns in one book. This is often referred to as the two-column cash book. The cash book is thus a joint book of cash and bank accounts. Both these accounts however may be kept separately in different books. There are one-column and three-column cash books in use. Other records show cash receipts and cash payments in separate books such as the cash receipts journal and cash payments journal. The different formats are illustrated below.

A simple one-column cash book

Date Particulars Folio Cash Date Particulars Folio Cash
20XX $ 20XX $
Jun 06 Coca & Co - 1,200 Aug 02 Cola Bros - 1,800


A two-column cash book

Date Particulars Folio Cash Bank
Date Particulars Folio Cash Bank
20XX

$ $
20XX

$ $
Jun 6 Coca & Co
1,200 -
Aug 2 Cola Bros

- 1,800


A three-column cash book

Date Particulars Folio Discount Cash Bank
Date Particulars Folio Discount Cash Bank
20XX

$ $ $
20XX

$ $ $
Jun 6 Coca & Co
60 1,200 -
Aug 2 Cola & Bros
90 - 1,800
# Article Title
1 One-column cash book
2 Two-column cash book
3 Three-column cash book