Explain the meaning and types of Cash Book? - rstdpp.orgA cash book is like a subsidiary book. It is a special book that will record only one type of transactions — cash transactions. In an organization thousands of cash transactions occur in a year and journalizing them all is tedious work. And so companies maintain cash books. Let us look at the three types of cash books and their functions. A cash book is both a ledger and a journal for all the cash transactions of a company since it performs the function of both.
Explain the meaning and types of Cash Book?
A cash book is a financial journal that contains all cash receipts and disbursements, including bank deposits and withdrawals. Entries in the cash book are then posted into the general ledger. A cash book is set up as a subsidiary to the general ledger in which all cash transactions made during an accounting period are recorded in chronological order. Larger organizations usually divide the cash book into two parts: the cash disbursement journal which records all cash payments, and the cash receipts journal, which records all cash received into the business. The cash disbursement journal would include items such as payments made to vendors to reduce accounts payable , and the cash receipts journal would include items such as payments made by customers on outstanding accounts receivable or cash sales.
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. Though cash book is considering as an original book of entry, it is also considered as an integral part of the ledger. Cash book is the book which serves the purposes of both journal and ledger. The details of every transaction are described in the cash book.
Meaning of Cash Book. A Cash Book is a special Journal which is used for recording all cash receipts and all cash payments. All cash transactions are first entered in the cash. Practically, the Cash Book is substitute for Cash Account in the ledger. On the debit side all cash receipts and discount allowed are recorded.
Definition : 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.
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Here we detail about the three types of cash book, i. Simple cash book contains only one amount column on each side debit and credit for recording cash receipts and cash payments. For recording transactions in the simple cash book, the foremost step is to understand the rule for recording transactions i. We know that cash book is also a cash account and there are two approaches for recording business transactions in the books of accounts. 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. The last, but not the least, cash book is to be balanced. As already stated, a separate cash account in ledger is not opened when a cash book is maintained.