Cash Book - Format - Advantages - Classification - Examples

A Cash Book is a book in which all cash transactions, whether cash payments or cash receipts, are recorded chronologically (date-wise). Cash Book is a Journal as well as  a Ledger because all the cash transactions primarily recorded in it so it is a journal. Also, we get the balance of all cash transactions in this book, so from this point of view, the cash book is a ledger.

Note: There is a difference between Cash for Book and Cash Book. Cash for book means that you want to sell your old, used or second hand textbook, books or half price books for cash while cash book is both a journal and a ledger to record only cash transactions.

Cash always shows favorable balance that is debit balance. However, if it shows unfavorable balance, then it is credit balance and it is not good sign for the business because liquidity position of the business is weakness to meet daily expenses or to repay the credit payments.

Format of Cash Book

Date	Particulars	Amount Rs.	Date	Particulars	Amount Rs.

Advantages of Cash Book

  ü  We record day to day expenses and receipts.

  ü  We can check the Cash position of the business at the glance.

  ü  Fraud and Errors ( mostly cashier can do) can be detected because it is verified with the ledger.

Kinds / Types / Classification of Cash Book

1.   Single Column Cash Book

Only cash transactions are recorded. Examples are goods sold for Cash, Rent paid, etc. It is also known as Simple Cash Book.

2.   Two Column Cash Book

In such book cash and bank transactions are involved. Examples are cash deposited into bank, withdrew from bank, cheque received from Mr. A, etc.

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3.   Three Column Cash Book

Cash, Bank and Discount transactions are involved in it. For example received a cheque / check from Mr. A for Rs.20000 for goods sold with a discount of  Rs.2000 of full price R.22000.

4. Petty Cash Book

In petty Cash book, day to day expense are maintained. Examples are conveyance allowance, postage expenses, stationary expenses, etc.

Special Transactions recorded in Cash book

ü  Cheque received form Mr. A for Rs.5000

Journal Entry

Cash A/C       5000

             Mr.A          5000

ü  After receiving cheque, we deposit into bank, then

Journal Entry

Bank A/C       5000

             Mr.A          5000

ü  Contra Entry

An Entry in which both cash and bank accounts are involved an it is written in both sides of cash book. For Example, Cash Rs.10000 deposited into bank or withdrew from bank.

Journal Entry

When Cash deposited into Bank

Bank A/C       10000

             Cash         10000

When Cash Withdrew from Bank

Cash A/C       10000

             Bank         10000

Note: Cash and Bank accounts are same thing. These are shown just two different positions:

  o  Cash in Hand

  o  Cash at Bank

Conclusion

Classification, Format, Examples are given above to show that Cash book is maintained to record all cash transactions either these are receipts or payments made either by cash in hand or cash at bank.