What is a Cash Book?
The cash book is unique — it serves a dual role:
- It's a book of original entry — cash transactions enter the books here first, just like the journal
- It's also a ledger account for cash — no separate Cash A/c needs to be maintained in the ledger
When a cash book is maintained, cash transactions are never recorded in the journal, and no separate Cash or Bank A/c is required in the ledger.
Cash books come in four variants of increasing sophistication: single column, double column, triple column, and a separate petty cash book.
Single Column Cash Book
The simplest form. One amount column on each side, for cash only. Records nothing else — no cheques, no discounts, no non-cash transactions.
Format
| Date | Receipts | L.F. | Amount | Date | Payments | L.F. | Amount |
|---|---|---|---|---|---|---|---|
| Jan 1 | To Capital A/c | — | 2,00,000 | Jan 3 | By Purchases A/c | — | 1,40,000 |
| Jan 7 | To Sales A/c | — | 80,000 | Jan 5 | By Stationery A/c | — | 2,000 |
How to balance it
- Receipts column (debit side) will always be ≥ payments column (you can't pay more than you've received)
- Write the difference as "By Balance c/d" on the credit side
- The balance b/d on the next day is the opening cash
Double Column Cash Book (Cash + Bank)
Two amount columns on each side — one for cash, one for bank.
Format
| Date | Receipts | L.F. | Cash | Bank | Date | Payments | L.F. | Cash | Bank |
|---|---|---|---|---|---|---|---|---|---|
| Mar 1 | To Balance b/d | — | 80,000 | 1,20,000 | Mar 4 | By Bank A/c | C | 24,000 | — |
| Mar 3 | To Osman A/c | — | 24,000 | — | Mar 8 | By Cash A/c | C | — | 20,000 |
Contra Entries
Notice the "C" in the L.F. column above? That marks a contra entry — a transaction that affects both cash and bank simultaneously. Examples:
- Cash deposited into bank → Cash decreases, Bank increases
- Cash withdrawn from bank for business use → Bank decreases, Cash increases
In a double-column cash book, a contra entry is recorded on both sides:
- Debit side (Bank column): "To Cash A/c" with "C" in L.F.
- Credit side (Cash column): "By Bank A/c" with "C" in L.F.
The "C" tells you not to post this entry to the ledger — it's already fully recorded within the cash book itself.
Triple Column Cash Book (Cash + Bank + Discount)
The most comprehensive form. Three money columns on each side: cash, bank, and discount. Used by larger firms that frequently allow and receive cash discounts.
How discounts work
- Discount Allowed (to debtors paying promptly) is recorded on the debit side
- Discount Received (from creditors when we pay promptly) is recorded on the credit side
- The discount columns are not balanced — they're totalled and posted to Discount Allowed A/c (debit) and Discount Received A/c (credit) in the ledger
Petty Cash Book & the Imprest System
Large businesses have a separate Petty Cash Book to track lots of small expenses — tea, taxi fares, postage, photocopying — so these don't clutter the main cash book. A Petty Cashier is appointed, separate from the Chief Cashier.
The Imprest System
The petty cashier is given a fixed amount (say ₹2,000) — the imprest amount — at the start of the period.
As they make small payments, the cash reduces. When most of it is spent (say ₹1,780), they get reimbursed for exactly that amount, restoring the imprest balance to ₹2,000 for the next period.
Benefits:
- The petty cashier is always accountable for a known, fixed amount
- The Chief Cashier gets a periodic summary of small expenses rather than dozens of micro-vouchers
- Reimbursements naturally occur weekly, fortnightly or monthly depending on volume
Format
A petty cash book has analysis columns — one column per type of expense (Travelling, Postage, Stationery, Office Expenses, Misc.) so totals by category are immediately visible.
The closing balance of petty cash appears on the asset side of the Balance Sheet as "Cash in Hand".
iAccounting maintains cash and bank as separate ledgers automatically. Contra entries (cash deposits, withdrawals, bank-to-bank transfers) are handled through a dedicated Contra Voucher that takes care of both sides in one step. Petty cash works the same way — just create a separate "Petty Cash" ledger and reimburse it on the imprest cycle that suits you.
See cash & bank features →Continue Learning
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