What is cash book and bank book
What is a Cash Book? Types of Cash Book. - Accountant SkillsDefinition : A cash book is that unique book of accounts which fulfils the objective of both, a journal and a ledger. Like a journal, it is the first book which records all the cash transactions of the business. It also acts as a subsidiary book to post all the cash transactions, similar to a cash account in the ledger. It can be broken down into two words, i. Cash is a real monetary instrument like currency, i. Book refers to a compiled record of the information available in the written or printed form. Thus, we can say that cash book is the record of all the business transactions in the form of notes or coins, taken place in a particular period.
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Cash book & bank statement
Cash book is used to record all cash transactions. Cash transactions not only involve receipt and payment of cash and cheques but also include cash discounts allowed and received. If we prepare cash book, we can put the two accounts in the same cash book together. Cash book is a book of original entry because it is the first book in which all transactions relating to cash and bank are recorded as and when they arise. This at the same time is a part of ledger because it contains cash and bank accounts. The balances of cash and bank columns at the end of accounting period are used to construct the trial balance and prepare the balance sheet. The pages of a cash book are vertically divided into two equal parts.
Most businessmen use a two or three column cash book with a bank column for recording transaction made through the bank account. Each time cash, cheques, money orders or postal orders etc. Similarly, when a cheque is issued to a supplier an entry is made in the bank column on the credit side of the cash book. Just as a businessman keeps his cash book so as to stay informed of his position with the bank, the bank also maintains some records to ensure that its position with each account holder is always known. This record is usually kept in the form of a personal account maintained more or less on the same lines as a businessman maintains personal accounts for his debtors and creditors. As a matter of practice, banks send to each account holder a list of entries made in their personal account maintained by the bank. This sheet is called a bank statement.
Cash book is the books of original entry which records the cash receipts and cash payments incurred during a particular period. All receipts and payments whether is received through Cheque, Cash, Bank Transfer, Postal order, Bank overdraft are recorded in the cash book.
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Accounting for Management
There are end number of transactions occur in the normal course of business, where in receipt or payment is made in cash or cheque. To record these transactions the entity uses cash book and contains all the details of the receipts and disbursements that are recorded chronologically. Many times cash book is juxtaposed with Passbook, but there is a slight difference in the two. With the help of pass book, banks inform their customer about the status of their account. There are a few differences between cash book and pass book which are discussed in this article in detail, have a look.