Single Column Cash Book
He has only one. column on each side for the amount In fact, it is written as a cash account in the general ledger (being a real account, what comes in is debited; what goes out is credited). This form of ‘cash book’ has the same rules as that of a general ledger account. It is not necessary to have a cash account in the general ledger. The cash book itself cleverly serves the purpose. Posting from the debit (receipt) side of the cash book is made to the credit side of the corresponding accounts and from the credit side of the cash book to the debit side of the corresponding accounts.
Balance
The cash book is balanced in the same way as a ledger account. Since we can’t pay more cash than we have, the cash balance (if any) should always be a debit balance. Therefore, the receipts column will always be larger than the payments column. The difference will be written on the credit side as “By balance c/d”. The totals are then entered in the two opposite columns and then on the debit side the balance is written as “To Balance b/d”. Shows the available cash balance at the beginning of the next period. To verify the accuracy of the entries made, the cash book should be balanced frequently (preferably daily). The balance according to the cash book must match the actual cash on hand.
Double Column Cash Book
As the phenomenon of offering and accepting discounts for prompt payment is closely associated with the act of receiving and paying cash, therefore, the utility of the cash book is increased if the discount columns are also provided in it. The cash book that has additional columns for discounting is known as a double column cash book.
triple column cash book
These days it is difficult to carry out any business without having dealings with the bank. Normally, the company keeps most of its funds in a bank in a checking account where frequent withdrawals and deposits are allowed. Bank transactions, that is. payments in and out of the bank are more numerous than cash transactions. Therefore, it is appropriate and convenient for the cash book to have an additional column on each side to record money deposited in the bank and hand payments. The added benefit of having this type of cash book is that you do not need to maintain a bank account on the ledger.
Before we explain the method of writing the three column cash book, you should be familiar with the concept of ‘contrary entries’. Also note the treatment of checks received and issued by the company.
counter inputs
In the three column cash book there will be some cross or contrary entries, ie. money transfer from cash to bank (amount deposited) and vice versa (amount withdrawn from the bank for office use). In all of these cases, both entries occur in the cash book and no general ledger entry is required. This is indicated by a counter sign (C) in the folio column, indicating that the double-entry aspect of this transaction is complete and does not require general ledger posting. The treatment of checks in a three-column cash book is explained below:
1. Checks received and deposited in the bank on the same day: When checks received from debtors are deposited in the bank on the same day of receipt, the entry is recorded in the bank column on the debit side of the cash book there from the debtor’s account receives credit.
2. Checks received but deposited at the bank at a later date: At the time the check is received, it is recorded in the cash column on the debit side of the cash book and the date it is deposited at the bank , Two steps are required:-
(2.1) Enter the same in the cash column on the credit side of the cash book “Por Bank A/c” and
(2.2) Enter it in the bank column on the debit side of the cash book ‘To Cash A/c’ Therefore, it assumes the entry form of Against the day of depositing the check in the bank received earlier.
However, if there is no information on the deposit date of the check, it must be assumed that the check was deposited in the bank on the date of receipt.
3. Checks received and endorsed in favor of a creditor:- Upon receipt, the check is recorded in the cash column on the debit side and at the time of endorsement it is recorded in the cash column on the credit side, By Creditors Ale.
4. Bearer checks can be cashed at the bank teller or deposited at the bank. In case it is collected, it should be recorded in the cash column on the debit side, in case it is deposited to the bank, it should be recorded in the bank column on the debit side of the cash book.
The cash book is a registered ledger
You often wonder if the cash book is a journal or a ledger. It is daily in the sense that all cash transactions are primarily recorded in the cash book with narration and are therefore posted to the appropriate general ledger accounts. The cash book is also a ledger in the sense that it serves both the cash account and the bank account (in the case of the three-column cash book). A separate cash account is not opened in the general ledger where the cash book exists. Therefore, the cash book is a unique combination of journal and ledger. It is popularly known as a registered ledger.
Similarities of the cash book with the journal
(1) Cash transactions are recorded in the cash book at the time of origination, that is, in the main ledger.
(2) Transactions are recorded by date.
(3) Cash book transactions posted to the appropriate accounts (except the cash account) in the general ledger.
(4) The cash book contains the general ledger folio as in the journal.
(5) A narrative is given for each entry.
Similarities of the cash book with the general ledger
(1) The shape of the cash book resembles With the ledger. Two sides The left side is the debit side (receipts) The right side is the credit side (payments).
(2) The words “Until” and “By” are used as in the ledger.
(3) A separate cash account and bank account in the general ledger are not required. Therefore, the cash book is the final entry book for cash and bank transactions.
(4) The cash and bank columns of the cash book are balanced periodically as are the general ledger accounts.
