In the case of a new business, the amount will be written in the cash column if cash is entered and in the bank column if deposited directly with the bank with the words “To capital account” on the debit side of the payment book. In the case of a continuing business, opening balances are written as “To balance b/d” on the receipt side of the cash book. (Dr Side)

It is used to record all receipts, both in cash and with checks, as well as to record the discount allowed to our debtors upon receipt of payment. Cash receipts are entered in the cash column, while amounts received by check are entered in the bank column; (It is always a good practice to cross out all checks received as “A/c Payables Only” and send them to the bank for collection. This provides protection against possible misappropriation of funds) and the discount allowed in the discount column.

Posting from the debit side of the cash book

It is to the credit of the respective accounts, in case credit must be given to the personal account for cash or check received plus discount allowed. At periodic intervals, the cash and bank columns will be balanced and the balance carried over to the next period, while the discount column will be totaled and posted to the debit side of the “Discount Allowed” account which will be kept in the ledger. elderly.

The payment side of the cash book (Cr. Side) is used to record all payments, both cash and check, and also to record the discount we receive or take advantage of from our creditors when making payment to them. Cash payments are entered in the cash column, check payments are entered in the bank column, and the discount received is entered in the discount column.

Posting from the credit side of the cash book

It is the debit of the respective account – in the case of personal accounts, a debit must be made for the total payments made and discount received. At periodic intervals, the discount column will be added up and posted to the “Received Discount Account” credit in the general ledger.

Balance

The cash columns are balanced in exactly the same way as explained in the case of the single column cash book. The discount columns are totaled but not balanced. The bank columns also balance just like the cash columns.

Since banks allow overdrafts, it is possible for the company to withdraw more than the amount deposited. In such a case, the total of the bank column on the credit side will be greater than that of the debit side. The difference is written on the flow side as “To balance c/d”.

Bank (Cash book) Air conditioning

Any time employees handle cash, there is always a danger that the employees could misappropriate cash. To minimize this risk, many of the business units follow this policy:

(1) All received cash is deposited intact in the bank, ie. none of the cash received is used to meet daily payments;

(2) All received checks are also sent to the bank for collection;

(3) All payments must be made by issuing checks.

However, small payments such as transportation, postage, local transportation, etc., which. Due to its nature, it cannot be, paid by check must be processed through another cash book known as the “Minor Cash Book”. We will discuss it later in this chapter.

If the above scheme is adopted, there is hardly any chance that the employee receiving the cash could misappropriate cash, either temporarily or permanently. The only care you need to take is to see if the daily receipt total matches the amount deposited in the bank (either the same day or the next business day) or not.

This can be checked on the ‘pay-in-slip’ checkbook. If you decide to use this type of cash book for your business, it should have only two columns on each side, Bank and Discount. It is not necessary to have a column of cash. It may also be called “Cashbook without Cash Column” or “Bank Cashbook”.

How to write? All receipts. either cash or check, it must be entered on the debit side of the book in the bank column. All payments must be entered on the credit side of the book in the bank column. The treatment of discount allowed and discount received is the same as discussed above.

The posting is also similar to that described in the three-column cash book.