Types of Cash Book: Cash book is the book in which all transactions concerning cash receipts and cash payments are recorded. Cash Book is in the form of an account. It serves the purpose of Cash Account also. On the debit side, all cash receipts are recorded while on the credit side, all cash payments are recorded. In case of cash transactions, only a single aspect of transactions is recorded in ledger because the other aspect has to be recorded in Cash Book. Cash Book thus serves the purpose of a book of original entry as well as that of a ledger account.
Types of Cash Book
(i) Single Column Cash Book: It is like an ordinary cash account. In this all cash receipts are recorded on the left hand side (real account – debit what comes in) and all cash payments are recorded on the right hand side (real account – credit what goes out).
(ii) Two (Double) Column Cash Book: It has two amount columns on both sides; one is for cash and another is for discount. Cash column is meant for recording cash receipts and payments while discount column is meant for recording discount received and allowed. The discount column on the debit side represents the discount allowed while discount column on the credit side represents the discount received.
(iii) Three Columnar Cash Book: This type of cash book contains the following three amount columns on each side:
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(a) Discount column for discount received and allowed;
(b) Cash column for cash received and cash paid; and
(c) Bank column for money deposited and money withdrawn from the bank.
When triple column cash book is prepared, there is no need for a separate bank account in the ledger. The bank account maintained by the enterprise is a personal account and the cash account is a real account. For recording transactions in the bank column of the cash book the rule of debit and credit applicable to personal accounts should be followed i.e. debit the receiver and credit the giver. Thus, when cash is deposited with bank, the bank would be the receiver and would be debited in the bank column of the cash book. Similarly, for cash withdrawn from the bank the bank would be the giver and would be credited in the bank column of the cash book.
Contra Entry:
If a transaction involves both cash and bank accounts, it is entered on both sides of the cash book, one in the cash column and other in the bank column, though on opposite sides. There are is called contra entries and word ‘C’ is indicated against that item in L.F. columns e.g. when cash is withdrawn from the bank, it is recorded on the debit side in cash column and on the credit side in the bank column. Similarly, when cash is deposited with the bank, the amount is recorded on the debit side in bank column and on the credit side in the cash column.
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