In fact, when a cash book is maintained separately, there is no need to keep a cash account in the ledger. For all purposes, a cash book is treated as a cash account (i.e., a part of the ledger). The keeping of a cash book under the stated system is known as the imprest petty cash book. Column WidthsThe Details column is 9cm wide.The other columns are 2.5cm wide – the cash book format looks more balanced if they are the same size.
A cash book is set up as a subsidiary to the general ledger in which all cash transactions made during an accounting period are recorded in chronological order. The primary goal of a cash book is to manage cash efficiently, making it easy to determine cash balances at any point in time, allowing managers and company accountants to budget their cash effectively. It is also much faster to access cash information in a cash book than by following the cash through a ledger. A cash book is a separate ledger in which cash transactions are recorded, whereas a cash account is an account within a general ledger. A cash book serves the purpose of both the journal and ledger, whereas a cash account is structured like a ledger. Details or narration about the source or use of funds are required in a cash book but not in a cash account.
A two-column cash book is prepared when both cash and bank transactions happen in the business. A cash book is a chronological financial record of all the cash transactions of a business involving cash receipts and cash disbursements. As explained earlier in this article, only the cash and bank columns of the triple-column cash book work as accounts and are therefore balanced.
All items on the debit side of the cash book are posted to the credit of respective accounts in the ledger. All items on the credit side of the cash book are posted to the debit of respective accounts in the ledger. The business can use the additional column to operate as a discounts journal.
The format of a Simple Cash Book is similar to an ledger account, with one amount column on each side. The left-hand side of the cash book is called Debit Side and it records cash receipts and the right-hand side of the cash book is called Credit side and it records cash payments. The procedure of posting entries from a cash book to ledger accounts has been explained in a single-column cash book article. The same procedure is followed for posting entries from double as well as triple column cash books to ledger accounts. A triple-column cash book is usually maintained by large firms that make and receive payments in cash as well as by bank and which frequently receive and allow cash discounts.
This type of cash book is mostly used by individuals who are tracking their personal finances. In most businesses, two or three-column cash books (with a bank column) are used to record any transactions made through the bank account. Single column cash-book contains only the cash transactions how to void a check done by the business. Single column cash book has only a single money column on debit and credits on both sides. It does not record the transaction-related, which involves banks or discounts. The transactions done on credit are not recorded while preparing the single-column cash–book.
Alternatively the business can use the additional column of the two column cashbook ledger to operate as a bank journal. A cash book is a comprehensive record of cash transactions, including receipts, payments, bank deposits, and withdrawals. It records the transactions of both bank account and cash accounts. It is also referred to as a three-column cash book format, and it is a complete form with three columns of money on both receipt and payment sides and records transactions about the cash, bank, and discounts.
The cash book is updated from original accounting source documents, and is therefore a book of prime entry and as such, can be classified as a special journal. In this way, the petty cashier will begin every period with an amount equal to imprest cash, and the amount held by the petty cashier will never exceed this. The amount spent by the petty cashier is reimbursed, thus making up the balance to the original amount. Under the fixed system of petty cash, a fixed amount is given to the petty cashier for a fixed period of time. As this explanation indicates, the cash book is among the most important books of accounts in modern business. It should be noted that the amount spent by the petty cashier cannot exceed the amount received.
Our team of reviewers are established professionals with decades of experience in areas of personal finance and hold many advanced degrees and certifications. Whenever it is necessary to determine the bank balance, the bank columns are summed on both sides. If the bank balance is a credit balance (overdraft), then it is entered on the credit side in the bank column. These headers are present for both the left side showing receipts and the right side showing payments. To solve these problems, the chief cashier delegates responsibilities to another senior staff member to account for day-to-day small transactions.
This type of cash book is used by businesses who want to track each individual transaction in the most detail possible. Triple column cash books will show all of the details from single and double column cash books plus some additional details. These would include things like purchase discounts, cash sales information and more.
