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Explain the meaning of cash book and its type?

Category : Accounting | Answer: 1 4 Months Ago

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Cash Book is a Book in which all cash receipts and cash payments are recorded. It is also one of the books of original entry. It starts with the cash or bank balance at the beginning of the period. In case of new business, there is no cash balance to start with. It is prepared by all organisations. When a cash book is maintained, cash transactions are not recorded in the Journal, and no cash or bank account is required to be maintained in the ledger as Cash Book serves the purpose of Cash Account.

 Cash Book records all transactions related to receipts and payments in terms of Cash only.

 Cash Books may be of the following Types:

  • Simple Cash Book
  • Bank Column Cash Book
  • Petty Cash Book

Simple Cash Book

A Simple Cash Book records only cash receipts and cash payments. It has two sides, namely debit and credit. Cash receipts are recorded on the debit side i.e. left hand side and cash payments are recorded on the credit side i.e. right hand side. In this book there is only one amount column on its debit side and on the credit side.

Bank Column Cash Book

When the number of bank transactions is large in an orgnisation, it is necessary to have a separate book to record bank transactions. Instead of having a separate book to record bank transactions, a column is added on each side of the Simple Cash Book. This type of cash book is known as Bank column Cash Book. All payments into bank are recorded on the debit side and all withdrawals/payments through the bank are recorded on the credit side of the cash book

Petty Cash Book

In big business organisations, a large number of repetitive small payments such as, for conveyance, cartage, postage, telegrams, courier and other expenses are made. These organisations appoint an assistant to the Head Cashier. The appointed cashier is known as petty cashier. He makes payments of these expenses and maintains a separate cash book to record these transactions. Such a cash book is called Petty Cash Book.

4 Months Ago
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