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A book in which all the cash receipt and cash payments including the funds that are deposited in the bank and funds which are withdrawn from the bank are recorded according to date of the transaction is known as the Cash book in accounting. All the transaction which is recorded in the cash book has the two sides i.e., debit and credit.
The difference between the sum of balances of the debit side and credit side shows the balance of the cash on hand or bank account. Cash book plays a dual role as it is the book of the original entry of the company as well as book the final entry.
Types of Cash Book Formats
There are three types of cash book formats which are the following:
1)Single Column
Single column cash-book contains only the cash transactions done by the business. Single column cash-book has only a single money column on debit and credits both sides. It does not record the transaction-related which involves banks or discounts. The transactions which are done on credit are not recorded while preparing the single column cash –book.
2)Double Column
Double column cash-book contains has two money column both on the debit side as well as the credit side. One column is for the transactions related to the cash and the other column is for the transactions related to the bank account of the business. So, under double-column cash-book, not only cash transactions but transaction through the bank is done by the business is also recorded. The transactions which are done on credit are not recorded while preparing the double column cash –book.
3) Triple Column
It is also referred as three-column cash book format and it is most exhaustive form which has three columns of money on both receipt and payment sides and record transactions pertaining to the cash, bank and the discounts. This book is maintained generally by the large firms that do transactions in cash mode as well as through the bank and frequently allows and receives cash discounts.
Advantages
- It helps in saving time and labor as in case of recording cash transactions in the journal, huge time and labor are required whereas, in case of cashbook, cash transactions are recorded straight away that is in form of the ledger.
- Management can know the balances of cash and bank at any time. It helps in effective cash management.
- Cashbook is balanced regularly which helps in avoiding frauds. Also, discrepancies if any arises can be found and rectified.
