CASH BOOK –

Introduction – in almost every business a major part of daily transaction relates either to cash
receipts or cash payments (including cheques). Further credit transactions are settled in cash.
Therefore it is essential to have a separate book to record such transactions and that book is called
‘Cash book’

Meaning: -cash book may be described as a special primary book which is used to record all cash
(including bank) transactions i.e. cash receipts and cash payments date wise. Cash Book is in the
form of an account. It serves the purpose of Cash Account also. On the debit side, all cash receipts
are recorded while on the credit side, all cash payments are recorded.

Take it from NT :- Cash book Plays role of both Journal as well as ledger

A Cash book is a journal as well as a ledger .It performs the dual role of journal and ledger that is
why it is termed as a journalised ledger.

It is a journal because;
(a) Cash transaction are recorded first in the journal, hence it is a book of prime entry.
(b) Transaction are recorded in order of their occurrence i.e., chronologically.
(c) Like journal it has L.F. (ledger folio) column
(d) Narration is given for each receipt and payment.
(e) Transaction recorded in the cash book is finally posted to the ledger.

It is a ledger because;
(a) It takes the form (T-shape) of a ledger account.
(b) Like a ledger account it has two sides –debit side (LHS) and credit side (RHS).
(c) While recording, the words ‘To’ and ‘BY’ are used as in case of ledger.
(d) It is a book of secondary (final) entry as no cash or bank account is opened further .

Like ledger account, it is balanced periodically

Types of Cash Book

(i) Single Column Cash Book

(ii) Two (Double) Column Cash Book
(iii) Three Columnar Cash Book
(iv) Petty Cash Book

Distinction between cash book and cash account.

S.N Basis Cash Book Cash Account

1 Nature it is a subsidiary book. It is a ledger account

2 Purpose It serves the purpose of both journal and It is a part of ledger only.
served ledger.

3 Narration narration is required No narration is given.

4 Journal No separate journal isrequired It is posted from journal
Single Column cash Book –It is a cash book which is used to records all cash transaction having only
one column for amount in both debits as well as credit side of cash book i.e. Cash column. It is like
an ordinary cash account.

In this all cash receipts are recorded on the left hand side (real account - debit what comes in) and
all cash payments are recorded on the right hand side (real account - credit what goes out).

Cash Book (Single Column)

Dr. Cr.
Date Particulars L.F Amount. Date Particulars L.f Amount

Example 1.from the following particulars prepare a single column cash book ignoring narrations and
post them in the ledger.
2018 Amt. ()
Feb. 1 opening balance of cash 28,900
4 Goods sold 15,000
10 goods purchased 8,000
15 furniture purchased 12,000
17 Dividend received 2,000
21 Deposited in the bank 3,500
25 paid salary 6000
28 paid rent 7,500

Solution

Cash Book (Single Column)

Dr. Cr.
Date Particulars L.F Amount. Date Particulars L.F Amount
2018 Feb.10 By purchase A/c 8,000
Feb.1 To balance b/d 28,900 Feb.15 By furniture a/c 12,000
Feb.4 To sales A/c 15,000 Feb 21 By bank 3,500
Feb.17 To dividend received 2,000 Feb.25 By Salary A/c 6,000
Feb28. By Rent A/c 7,500
45,900 8,900
45900

Two (Double) Column Cash Book: it is a special book used to record all cash transactions having two
columns of amount in both sides of cash book i.e. cash column and Discount column. Cash column is
meant for recording cash receipts and payments while discount column is meant for recording
discount received and allowed. The discount column on the debit side represents the discount
allowed while discount column on the credit side represents the discount received.
 Cash Book (Double Column)

Date Particular L.F Dis. Cash Date Particulars L.F Dis Cash

Illustration: From the following transactions, prepare a Cash Book with Cash and discount Columns
of M/s Mann Bros. :

2015 Rs.

April 1 Opening balance 19000

April 3 Received from Basu 3840

And discount allowed to him 160

April 4 Sold goods for cash 1500

April 6 Purchased goods for cash 3200

April 9 Received cash from chatterjee 6300

Discount allowed 100

April 15 Purchased a machine for 7000

April 18 Paid Banerjee 3900

Discount received 50

April 20 Received interest on investments 600

April 22 Paid to Bose 2100

April 25 Paid to Naidu and 1900

Discount allowed by him 100

April 28 paid for salaries 1400

April 29 Paid for rent to landlord 1500

April 30 Received a loan from bank 6000

Solution:

Dr. CASH BOOK (WITH CASH AND DISCOUNT COLUMNS) Cr

Date Particular L.F Dis. Cash Date Particulars L.F Dis Cash
2015 2015
April 1 To bal b/d 19000 April16 By Purchases A/c 3200
April 3 To Basu 160 3840 April15 By Machinery 7000
April 4 To sales A/c 1500 A/c
April 9 To Chatterjee 100 6300 April18 By Banerjee 50 3900
April20 To Interest on 600 April22 By Bose 2100
Investment A/c April25 By Naidu 100 1900
April30 To Bank Loan A/c 6000 April28 By Salaries A/c 1400
April29 By Rent 1500
April30 By Balance c/d 16240
260 37240 150 37240
‘
May 1 To bal b/d 16240
.

Triple column cash Book: - A special book used to record all cash transactions i.e. cash (including
bank) receipts and cash payments (including bank), having three column of amount both sides of
cash book

Specimen of Triple column cash Book

Date Particulars L. Dis. Cash Ban Date Particulars L. Dis Cash ban
F k F k

Some important points regarding Triple column cash book

1. Contra Entries: The transactions which are related to cash and bank accounts and affect
both cash and bank accounts are called as contra entries.
Example: (i) For Opening bank Account:
When the bank account is opened, following entry is passed:
Bank A/c Dr
To cash A/c
(Being cash paid into bank)
Example: (ii): Cash paid into Bank:
When the cash is deposited into bank, the following entry is passed:
Bank A/c Dr
To cash A/c
(Being cash paid into bank)
As the cash book with cash and bank column is a combined cash and bank account, both the
aspects of the transactions will be entered in the same book. On the debit side ‘To cash A/c’
will be entered in the particulars column and amount will be entered in the bank column. On
the credit side ‘By Bank A/c’ will be entered in the particulars column and the amount will be
entered in the cash column.
Example (iii): Cash withdrawn from bank for office use:
In this case, the cash balance is increased and bank balance is reduced. Following entry
is passed:
Cash A/c Dr.
To bank A/c
(Being cash withdrawn from bank)
 On the debit side “To Bank A/c” will be entered in the particulars column and amount will be
entered in the cash column. On the credit side “By Cash A/c” will be entered in the
particulars column and the amount will be entered in the bank column.

Such Contra entries are denoted by writing the letter’ C’ in the LF column, on both the sides
of the cash book. They indicate that no postings in respect thereof is required in the ledger.
2. Receipt of Cheque: It has two situations:
(i) Recording in bank column: When the cheques received are deposited into the bank
on the same day then their amounts are debited to bank column in the cash book.
The following journal entry is passed in this case:
Bank A/c dr.
To Sales/Personal/Other relevant A/c
(Being cheques received and deposited into bank)
(ii) Recording in cash column: When cheques received are nit deposited in the bank on
the same day, then they are first recorded in the books of accounts by means of a
journal entry as follows:
Cheques-in-hand A/c Dr.
To Mittal (say)
(Being cheque received from Mittal not deposited into bank)

When this cheque is deposited into the bank, it is recorded in the cash book by entering in the bank
column on the debit side as follows:

To Cheques in Hand A/c

In the question, sometimes there is no information as to the deposit date of the cheque. In such a
case, it will be assumed that the cheque has been deposited into the bank on the same day.

It must be noted that amount of cheque is debited in cash column only when it is a bearer or order
cheque. If the cheque is a crossed cheque then its amount will be directly debited to bank colum,
because amount of such cheque is never received in cash.

The following journal entry is passed in this case:

Bank A/c Dr.

To Sales/Personal/Other relevant A/c

3. Endorsement of a cheque: Sometimes, a cheque received from a customer is not deposited

into bank, but it may be endorsed to some other person. The receipt as well as endorsement
of cheque is recorded through the Journal not cash book because receipt and endorsement
of cheque neither effects Cash not Bank Account. For example, a cheque for Rs.26000 is
received from Dolly on 5th June, 2016 and it is endorsed to Rajeev on 9th June, 2016. In this
case, we shall pass two journal entries, one for receiving cheque from Dolly and another for
endorsing cheque to Rajeev. The Journal entries shall be as follows:
Date Particulars L.F Debit Credit
2015
June 5 Cheques-in-Hand A/c Dr. 26000
 To Dolly 26000
(Being cheque received from Dolly not
deposited into bank)
June 9 Rajeev A/c Dr. 26000
To Cheques-in-Hand A/c 26000
(Being cheques received from Dolly,
endorsed in favour of Rajeev)

4. Payment by Cheque: When a payment is made by issuing a cheque, the Bank account is
credited at the time of issue of cheque, so that we may have knowledge of bank balance.
The following journal entry is passed in this case:
Relevant A/c Dr.
To Bank A/c
5. Dishonouring of a cheque: When deposited cheque is dishonoured then its dishonouring is
recorded in the Cash book by crediting the bank column. It must be kept in mind that if a
discount has been allowed on receipt of cheque then discount amount will now be credited
in discount column along with the amount of cheque credited in the bank column.
The following journal entry is passed in this case:
(i) When a cheque is dishonoured:
Drawee A/c Dr.
To Bank A/c
(ii) When discount allowed on a cheque is dishonoured:
Drawee A/c Dr.
To Bank A/c
To Discount Allowed A/c
6. Bank Charges: Generally, Business opens a current account in the bank. It has a facility that
amount can be deposited or withdrawn from this account at any time. Generally banks claim
charges according to the number of transactions with the account holder. This is not paid in
cash and is only debited to the bank account by the bank. It is called bank charges. We came
to know about it only when it is recorded in the bank Pass book by the bank. This is credited
in the bank column of Cash Book as “by bank A/c”.
The following journal entry is passed in this case:
Bank Charges A/c Dr.
To Bank A/c
7. Balancing: Discount columns are not balanced, their totals are made. Cash column is
balanced and it has always a debit balance as the total of the debit side is more than the
total of the credit side. But bank column may have a bank overdraft, i.e, total of the credit
side may be more than the total of the debit side.
8. Closing: Cash column always has a debit balance. Bank column may have a debit as well as
credit balance. This credit balance is called as Bank Overdraft. Closing cash balance is shown
on credit side by recording. “By Balance c/d”. But in the case of bank overdraft, the closing
balance is shown on debit side of bank column as “To balance c/d”. In next month or next
period, the opening balance of overdraft is shown in cash book on credit side as “By Balance
b/d”
 9. Drawings: when a proprietor withdraws cash for his personal use, then the amount is
credited in the Cash book by recording “By Drawings A/c”. The amount is shown in cash
column, if the amount is withdrawn in cash and if drawn from bank, then it is shown in bank
column.
10. Noting Charges: The amount charged by bank on dishonouring of a bill or cheque, is added
in the amount of cheque and is debited to the acceptor’s account and credited in cash book
in bank column.
The following entry is passed in this case:
Noting Charges A/c Dr.
To Bank A/c
(Being noting charges paid by bank on dishonour)
Cheques-in-Hand
If any cheque or draft received is not deposited into the bank on the same day, it is denoted
as Cheques-in-Hand and recorded in the books of accounts through a journal entry which is
as follows:
Cheques-in-hand A/c Dr.
To (Name of the party, the cheque is received from)
Once the cheque is deposited, the following journal entry is passed:
Bank A/c Dr.
To Cheques in Hand A/c
The bank column of the Cash Book is also debited when the cheques are deposited into
bank. This is done by stating “To Cheques-in-Hand” on the receipts side of the cash book
mentioning the amount of cheques in the bank column.
Example: A cheque for Rs.50000 received from Lakshman Ltd. On April 20, 2016 was
deposited into bank on April 25, 2016
Cash Book

Date Particulars L.F Cash Bank Date Particulars L.F Cash Bank
2016
Apr 25 To
Cheques- 50000
in-hand

Substitute Treatment
Alternatively, a cheque received but not deposited into bank on the same day can be
recorded in the cash book. Later, once the same cheque is deposited into bank, the amount
is entered in the bank column on the debit / receipts side of the cash book since bank
balance increases.
Simultaneously, in the cash column the amount of cheque is entered on credit/payments
side reduce the cash balance by the same amount. Thus, as seen above, this treatment is
similar to cash being deposited into bank.
It should be noted that in a question if there is no specific mention of the date on which
cheques are deposited into bank, it is assumed that cheques have been deposited on the
same day.
The first treatment has been preferred by us due to its relative clarity and has been followed
in this book.
Illustration: Enter the following transactions in three columnar cash book, balance it and carry out
the posting:

2015

Nov . 1 Balance of cash in hand Rs. 4000 and in bank Rs. 10000

Nov. 2 Received cash from Mohan Rs. 1000 and allowed him discount Rs. 30

Nov. 3 paid into the bank Rs. 2000

Nov.4 Paid to Dinu and Co. by cheque Rs. 320 in full settlement for their account for Rs. 350

Nov . 5 Received from cash sale, cash Rs. 275 and cheque Rs. 225.

Nov. 6 Paid for cash purchases by cheque Rs. 645

Nov. 7 Paid by cheque to Radha and Co. Rs. 725 in full settlement of Rs. 800.

Nov. 8 Drew for office use Rs. 900 and Rs. 100 for personal use from bank.

Nov. 11 paid cash for advertisement Rs. 45.

Nov. 15 Drew a cheque of Rs. 500 for personal use.

Nov. 19 Paid salaries to staff by cheque Rs. 1250

Nov. 20 Paid life insurance premium Rs. 300

Nov. 23 Paid rent Rs. 400

Nov. 26 Purchased by cheque, office furniture worth Rs. 375

Nov. 30 Received a cheque of Rs. 580 from Mayaand Co. in full settlement of their account for Rs.
620

Solution:

CASH BOOK (Triple column)

Date Particulars L. Dis. Cash Ban Date Particulars L. Dis Cash Ban
F k F k
2015 2015
Nov. To balance b/d 4000 100 Nov. By Bank C 2000
1 00 3 320
Nov. To Mohan 30 1000 Nov. By Dinu and
2 4 Co. 30 645
Nov. To Cash C 200 Nov. By Purchases
3 0 6 725
Nov. To Sale 275 225 Nov. By Radha 75
5 7 and Co. 900
Nov. To Bank C 9000 Nov.
8 8 By cash C 100
 Nov. To Maya and Nov.
30 Co. 40 580 8 By drawings
Nov.
11 By
Advertismen 45
t
Nov.
15 By Drawings 500

Nov. BySalaries
19 A/c 125
Nov. By Drawings 300 0
20
Nov. By Rent A/c 400
23
Nov. By furniture
26 A/c 375

Nov. By balance 3430 799

30 c/d 0
105 6175 128
70 6175 128 05
05

Dec
1 To Balance 3430 799
0

Mohan A/c

Date Particulars L.F Amount. Date Particulars L.F Amount

2015 2015
Nov. 1 Nov 2 By cash A/c 1000
To balance b/d ? By Discount A/c 30

Sales A/c

Date Particulars L.F Amount. Date Particulars L.f Amount

2015
? Nov 5 By cash A/c 275
By Bank A/c 225

Maya and Co A/c

Date Particulars L.F Amount. Date Particulars L.f Amount

2015 2015
Nov. 1 To balance b/d 620 Nov 30 By cash A/c 580
 Nov 30 By Discount A/c 540
620 620

Dinu and Co. A/c

Date Particulars L.F Amount. Date Particulars L.f Amount

2015 2015
Nov. 4 To bank A/c 320 Nov 1 By Balance c/d 350
Nov. 4 To Discount A/c 30
350 350

Purchases A/c

Date Particulars L.F Amount. Date Particulars L.f Amount

2015
Nov.6 To bank A/c 645

Radha and Co. Account

Date Particulars L.F Amount. Date Particulars L.f Amount

2015 2015
Nov. 7 To bank A/c 725 Nov 1 By Balance c/d 800
Nov. 7 To Discount A/c 75
800 800

Drawings A/c

Date Particulars L.F Amount. Date Particulars L.f Amount

2015 2015
Nov. 8 To bank A/c 100 Nov 1 By Transfer to capital 900
Nov. 15 To bank A/c 500 A/c
Nov. 20 To bank A/c 300
 Advertisement A/c

Date Particulars L.F Amount. Date Particulars L.f Amount

2015
Nov. 11 To cash A/c 45

Salaries A/c

Date Particulars L.F Amount. Date Particulars L.f Amount

2015
Nov.19 To bank A/c 1250

Rent A/c

Date Particulars L.F Amount. Date Particulars L.f Amount

2015
Nov. 23 To cash A/c 400

Furniture A/c

Date Particulars L.F Amount. Date Particulars L.f Amount

2015
Nov.26 To bank A/c 70

Discount A/c

Date Particulars L.F Amount. Date Particulars L.f Amount

2015 2015
Nov.30 To Sundries A/c 70 Nov. 30 By Sundries A/c

Illustration: Enter the following transactions in triple column cash book of Sunita Traders:

2016 Rs.
Mar. 1 Started Business with cash 9000

Mar.1 Deposited in the bank 4000

Mar.2 Purchased office equipment 1000

Mar 4 Cash Purchases, issued cheque 2500

Mar.8 Received cheque from Banwari Lal on account 3250

Mar 10 Cash sales, received cheque 1270

Mar 15 Office expenses 275

Mar 25 Office rent paid by cheque 300

Mar 28 Received cheque from Vinod and endorsed

the Same to Pramod 400

Mar 30 Paid advance income tax by cheque 575

Mar 31 Deposited into bank,

Balance of cash in excess of 300

Solution:

CASH BOOK (Triple column)

Date Particulars L. Di Cash Bank Date Particulars L. Di Cash bank

F s. F s
2016 2016
Mar1 To capital A/c 9000 Mar1 By Bank C 4000
Mar1 To Cash C 4000 Mar2 By Office 1000
Mar8 To Banwari Lal 3250 equipment
Mar Mar4 By Purchases 2500
10 To sales A/c 1270 A/c
Mar 400 Mar By office 275
28 To Vinod 15 expenses
Mar Mar By Office 300
31 To cash C 3425 25 rent A/c
Mar By Pramod 400
28
Mar By drawings 575
30
Mar By bank C 3425
 31
Mar By balance 300 8570
31 c/d
9400 1194
5 9400 11945
Apr.
1 To balance b/d 300 8570

Analytical or Columnar Petty Cashbook

In the analytical petty cash book, similar payments are analysed and grouped under one head. One
column is provided for one class of petty expenses. So it is also termed as columnar, petty cash book.
For example, expenses incurred on account of postage stamp, post card, postal charges, telephone
rent, etc. can be shown under one head “Postage and Telephone” in one column. As a result, we can
know the total expenses incurred u der different heads and consequently better control can be
exercised.

Visual Heads are:

Heads Related expenditure

1. Carriage Carriage, cartage freight, coolie charges
2. Postage and Telephone Postage stamp, post card, postal charges,
telephone etc.
3. Conveyance Bus fare, auto fare, tonga charges etc.

4. Printing and Stationery Printing charges, pen, paper, pencil, alpin etc.
5. Office expenses Office clearing, office repairs, etc
6. Refreshment Tiffin, snacks, tea, etc
7. Ledger Advance to employees
8. Miscellaneous (others) Tips to peon, charity, any other expenses not
covered above.

N.B. the above heads are not exhaustive. Hence, if necessity arises new heads may be opened.

Specimen of Analytical Cash Book

Analytical Petty Cash Book

Dat Amoun Particular V. Total Carriag Postage Convey Printing and Mis
e t s N Payment e and telephon ance Stationery c
receive o cartage e
d
*** To
balance
b/d
 *** To bank
By freight *** ***
By
postage ***
By bus ***
fare ***
By
stationer *** ***
y
By charity *** ***
*** *** *** *** *** *** ***
By
balance ***
c/d
To
balance
*** b/d

N.B Posting and balancing of analytical petty cash book is similar to that of simple cash book.

Illustration: Prepare an analytical petty cash book from the following particulars for the month of
March, 2015

2015, March Amt(Rs)

1 Received from main cashier an imprest sun 500

3 Paid for cartage 25

5. Printing expenses 17

7. Postage paid 12

9. Donation given 30

10. paid to Hari on account 13

12. Tea and Snacks to customers 42

16. Paid for stationery 56

17. Paid wages 5

20. Paid for carriage 30

21. office cleaning expenses 16

22. Spent for charity 8

24. Spent on coldrinks 24

25 Paid for Pen and Pencil 20

26. coolie Charges paid 15

27. postal charges 6

29. tip to peon 10

30. Telephone expenses paid 60

31. Tonga charges paid 35

Solution:

Analytical Petty cashbook

Date Amou Particul V.N Total Carria Printing Postage Refreshm chari Othe
nt ars o Payme ge and telepho ent ty rs
receiv nt and Station ne
ed cartag ery
e
Mar
ch
1 500 To cash
A/c
3 By
cartage 25 25
5 By
Printing 17 17
7 By
Postage 12 12
9 By
Donatio 30 30 30
n
10 By hari 13 13
12 By tea, 42 42
etc
By 56 56
16 statione
ry
17 By 5 5
wages
20 By 30
carriage
21 By off. 16 16
Cleaning
By
22 charity 8 8
By cold
24 drinks 24 24
By pen,
25 pencil 20 20
By
26 coolie 15 15
 ch.
By
27 Postal 6 6
ch.
By Tips
29 to peon 10 10
By
30 telepho 60 60
ne
By
31 Tonga 35
ch

500 424 105 93 78 66 38 44

April To
1 76 balance
b/d
1 424 To cash
A/c

Illustration: Write up a simple petty cash book from the following particulars:

2016 Rs

Jan 1 Balance in hand with petty cashier 40

Jan 1 Received cheque for petty cash from the cashier 460

Jan 2 Paid for postage stamps 30

Jan 6 Paid for stationery 75

Jan 9 Paid cartage on goods 28

Jan 12 Paid for refreshments 42

Jan 14 Sent a telegram to Delhi 18

Jan 15 Paid for printing 97

Jan 20 paid tips to peon 15

Jan 23 Paid taxi-hire to manager 34

Jan 27 Paid for freight 29

Jan 31 Paid for coolie hire 12

Solution:

SIMPLE PETTY CASH BOOK

Amount Date Particulars V.No L.F Amount

received paid
Rs-P 2016
40.00 Jan 1 To Balance b/d
460.00 Jan 1 To bank
Jan 2 By Postage and Telegram A/c 30.00
Jan 6 By Printing and Stationery A/c 75.00
Jan 9 By Carriage and Cartage A/c 28.00
Jan 12 By Sundry Expenses A/c (refreshment) 42.00
Jan 14 By Postage and Telegram A/c 18.00
Jan 15 By Printing and Stationery A/c 97.00
Jan 20 By Sundry Expenses A/c(tips to peon) 15.00
Jan 23 By Conveyance 34.00
Jan 27 By Freight A/c 29.00
Jan 31 By Carriage and Cartage A/c 12.00
Jan 31 By balance c/d 120.00
500.00 500.00

120 Feb 1 To balance b/d