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Cash Book in Accounting

Diterbitkan : Rabu, 27 Desember 2023 - Kategori : Bookkeeping

types of cash book

Because the cash book acts as both; in the journal and ledger, the closing balance of it is directly transferred to the trial balance. That means if the cash book has been maintained properly, there will be no need to prepare a cash ledger. 1.It offers easy verification of cash by matching the balance in the cash book with actual cash in hand and is therefore helpful in identifying mistakes in the entry. Cash books are updated on a daily basis in some business firms.

What is an analytical petty cash book?

Single column cash-book contains only the cash transactions done by the business.
Double column cash book is also known as two column cash book.
It is mostly used by firms that avail of massive cash discounts.
Yes, if you make an error while writing a cheque, you can cancel it by crossing it out by two parallel lines and writing “CANCELLED” across the cheque.
Discount being a nominal account the discount provided is placed on the debit side of the cash book while discount received is placed on the credit side of the cash book.

Folio’ column, page number of cash book in which payment to petty cashier is made is to be recorded. The procedure for recording transactions in the cash book with bank column is the same as that stated in the case of simple cash book. Depending upon the reputation or goodwill of the business enterprise, bank fixes a limit on withdrawals, which is known as credit limit. It means bank column may either show debit or credit balance depending upon how receipts and payments made through bank column of the cash book have affected the credit limit.

Traceability of Payments

The pages of this book are vertically divided into two equal parts. If a cheque is received and deposited into a bank account on the same date, it will appear on the debit side on the cash book in the bank column. Petty cash book is a kind of cash book which records large number of small payments such as conveyance, cartage, postage, telegrams and other expenses under the imprest system. The procedure becomes cumbersome if all small and repetitive payments are handled by the main cashier and are recorded in the main cash book. After knowing the rule for recording a transaction, it is essential for us to learn the procedure for recording the transactions in the simple cash book.

Traveller’s Cheque

Under this system, the petty cashier is given a lump sum to meet petty expenses. When the whole amount of petty cash is spent, the petty cashier submits the account to the chief cashier who again pays a lump sum to the petty cashier. By specifying the amount, recipient, and date, cheques help reduce misunderstandings in financial transactions. The written format ensures that both parties are fully aware of the payment details.

Order Cheque

types of cash book

The cheque payee is the person or entity to whom the payment is directed. It is essential to spell the payee’s name correctly on the cheque, as banks may reject cheques with incorrect or unclear payee details. A cheque acts as tangible proof of payment, offering a physical transaction record. This can be particularly important for legal matters or business transactions, where having documented evidence of payment can be essential for accountability. One of the major benefits of using a cheque is its traceability.

Always debit balance:

Sometimes there are dozens of such transactions that occur in just one day. Examples are expenses for postage, stationery, traveling, food bills, etc. This cash book has the cash, the discount and additionally the bank columns in it.

Such a cash book is maintained by the petty cashier (who in most cases also handles the petty cash). Entries are recorded just like a ledger account with the help of “To” and “By“. The number of cash transactions in a business is generally large, hence it is convenient to have a separate cash book to record such transactions.

A single column cash book has only one money column on the debit and credit sides to record cash transactions. This is the reason why it is called a single column cash book (or a simple cash book). Cash books record all transactions for cash, checks, how do i change my turbo tax product money orders, or postal orders. Bank statements are lists of entries for each account holder that has been made in their personal accounts. Most businesses use a two or three-column cash book to note any transactions made through a bank account.

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