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Cash Book

A Cash book is a book of original entries used to record the transactions related to cash and bank. In other words cash book is a cash receipt and cash payment journal put together in one book. Cash book contains cash column as well as bank column to record cash and bank account related transactions. However, it's not the hard and fast rule, cash book can only be used to record cash related transactions (where there is a small business that doesn't use a bank account).

Firms use cash books because it’s easier to record all cash and bank account related transactions in one book than to record them in three different accounts cash account, bank account and discount account and it’s easy to find out that how much money received and paid on particular date with the help of cash book. Moreover, cash book provide more detail of a transaction than a normal ledger account

EXAMPLE

A Cash book of X.Y.Z superstore for the month of January.
(means that this book records all cash and bank related transactions which took place in the month of January)



X.Y.Z Superstore
Cash Book
For the month of January 2011

Dr. (Debit)                                                                                                                                         Cr. (Credit)

Date
Description
Folio
Discount
Cash
Bank
Date
Description
Folio
Discount
Cash
Bank
Jan.1
      3
    24
    25
Balance b/d
Debtor-Allen
Bank
Commission










45
20000
2000
500

30000


300
Jan.6
      8
    10
    15
    18
    24
    27
Creditor-Aw Co.
Rent Expenses
Wages
Salaries
Office expenses
Cash
Machinery


Balance c/d








30








15

200
300

500




21500
1000


3000

500
5000


20800
    31TOTAL
452250030300    31TOTAL
452250030300


Folio column
This column is filled in when we post transactions from cash book to ledger account. It is used as reference for double entries in accounts
Discount column
It is used to record discount received from supplier and discount allowed to customers
Cash column
It is filled in for transactions related to receipts and payments of cash
Bank column
It is used for recording transactions related to receipts and payment of cash through bank account e.g receiving and making payments via cheques


EXAMPLE No. 2

Drawing up a cash book of whole seller business X.Y.Z whole seller for month of February, 2011

Balance brought down from the last month Cash $20,000, Bank $50,000


   February 1.Paid rent by cash $2000
   February 2.Received cash $1000 from j brown and discount allowed $100 
   February 7.Received cheque for $5000 from Mr. B and discount $200 
   February 9.Paid by cheque $4000 to a creditor S man 
   February 15.Purchased goods and paid by cheque $5000 
   February 16.Paid $500 for sundry expenses by cheque 
   February 20.Cash sales of $4000 paid direct into bank account
   February 26.J berry paid us $3000 for good purchased on credit last month
   February 29.Withdrawn cash $3000 and goods worth $2000 for personal use  




                                                               X.Y.Z Whole seller
                                                                       Cash Book
                                                     For the month of February 2011
Dr. (Debit)                                                                                                                                        Cr. (Credit)
Date
Description
Folio
Discount
Cash
Bank
Date
Description
Folio
Discount
Cash
Bank
Feb.1
      2
      7
    20
    26
Balance b/d
J brown
Mr. B
Sales
J berry








100
200
20000
1000


3000

50000
5000
4000
Feb.1
      9
    15
    16
    29
Rent exp.
S man
Purchases
Sundry exp.
Drawings


Balance c/d









2000



3000


19000

4000
5000
500



49500
    31TOTAL
3002400059000    31TOTAL

2400059000