Writing single Column Cash Book, double Column Cash Book and Triple Column Cash Book

Free Non Profit Bylaws Template - Writing single Column Cash Book, double Column Cash Book and Triple Column Cash Book

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Single Column Cash Book

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Free Non Profit Bylaws Template

It has only one. Column on each side for estimate In fact, it is written just like cash inventory in the ledger (being real inventory what comes in is debited; what goes out is credited). This form of 'cash book has the same ruling as that of a ledger inventory There is no need of having a cash inventory in the ledger. The purpose is ably served by cash book itself. Posting from debit (receipt) side of the cash book is done to the credit side of involved accounts and from the credit side of cash book to the debit side of involved accounts.

Balancing

The cash book is balanced in the same manner as a ledger account. As more cash cannot be paid then what we have, therefore the cash balance (if any) must always be a debit balance. Therefore, the receipts column will always be bigger than the payments column. The distinction will be written on the credit side as "By balance c/d". The totals are then entered in the two columns opposite one other and then on the debit side the balance is written as "To balance b/d". It shows the cash balance in hand in the beginning of the next period. To verify the accuracy of the entries made, the cash book should be balanced often (preferably daily). The balance as per cash book must tally with the actual cash in hand.

Double Column Cash Book

As the phenomenon of offering and accepting cash discount is closely related with the act of receipt and cost of cash, therefore, the utility of cash book increases if the columns of discount are also in case,granted in it. Cash book having supplementary columns for discount is known as double column cash book.

Triple Column Cash Book

These days it is difficult to carryon any firm without having dealings with the bank. Regularly bulk of its funds is kept by the firm at a bank in a current inventory where frequent withdrawals and deposits are permitted. Bank transactions, i.e.. Payments into and out of bank are more numerous than cash transactions. Therefore, it is standard as well as convenient that cash book should have one supplementary column on each side to report moneys deposited at bank arid payments out of the hank. The supplementary advantage to having this type of cash book is that bank inventory is not required to be maintained in the ledger.

Before we clarify the formula of writing up the triple column cash book you should be well-known with the opinion of 'contra entries'. Also note thought about the treatment of cheques received and issued by the business.

Contra Entries

In the three column cash book there will be some cross or contra entries i.e.. Replacement of money from cash to bank (amount deposited) and vice versa (amount withdrawn from bank for office use). In all such cases both entries occur in the cash book and no ledger entry is required. This is indicated by a contra sign (C) in the folio column indicating thereby that the double entry aspect of this transaction is unblemished and it requires no posting to the ledger. treatment of cheques in a triple-column cash book is explained below:

1. Cheques received and deposited in the bank on the same day: When the cheques received from the debtors are deposited in the bank on the day of receipt itself the entry is recorded in the bank column on the debit side of the cash book there from debtor's inventory receives credit.

2. Cheques received but deposited in the bank on a later date: At the time when cheque is received it is recorded in the cash column on the debit side of the cash book and the date on which it is deposited in the bank, Two steps are required:-

(2.1) Enter the same in the cash column on the credit side of the cash book "By Bank A/c" and
(2.2) Enter it in the bank column on the debit side of the cash book' 'To Cash A/c". Thus it assumes the form of Contra entry on the day of depositing the cheque into bank received earlier.
However, if there is no data as to the date of deposit of the cheque, it should beassumed that the cheque was deposited in the bank on the date of receipt.

3. Cheques received and endorsed in favor of some creditor :- On receipt, cheque is recorded in the cash column on the debit side and at the time of endorsement the same is recorded in cash column on credit side, By Creditors Ale.

4. Bearer cheques may be en cashed at the counter of the bank or it may be deposited in the bank. In case it is en-cashed it should be recorded in the cash column on the debit side, in case it is deposited in the bank the same should be recorded in the bank column on the debit side of the cash book.

Cash book is a Journalized ledger

Often a question is asked whether cash book is a journal or ledger? It is journal in the sense that all cash transactions are primarily recorded in the cash book with narration and therefore, these are posted to the relevant accounts in the ledger. Cash book is also ledger in the sense that it serves the purpose of cash inventory and bank inventory (in case of triple column cash book). No cut off cash inventory is opened in the ledger where cash book is in existence. Thus cash book is a unique mixture of journal and ledger. It is popularly known as journalized ledger.

Similarities of Cash book with journal

(1) Cash transactions are recorded in the cash book at the time of origin i.e. Original book.

(2) Transactions are recorded date-wise.

(3) Transactions from cash book posted to the relevant accounts (except cash account) in the ledger.

(4) Cash book contains ledger folio as in the journal.

(5) Narration is given for each entry.

Similarities of Cash book with ledger

(1) Form of cash book resembles With ledger. Two sides left hand side is the debit side (receipts) Right hand side is the credit side (payments).

(2) Words "To" and "By" are used as in the ledger.

(3) No cut off cash inventory and bank inventory are required in the ledger. Thus cash book is the book of final entry for cash and bank transactions.

(4) Cash and bank columns of the cash book are periodically, balanced just like ledger accounts.

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