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What is cash book? format of a cash book.

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The cash book is the most important subsidiary book in any business concern.It is used to record cash transaction in which cash is received or in which cash is paid is known as cash transaction.When cash is received cash account is debited,and when cash is paid cash account is credited in the journal.The other account involved is either debited or credited as the case may be.But it is not necessary to journalise each cash transaction,when a cash book is maintained. All cash transactions are are first entered in the cash book.The cash book has two sides, a receipt side or debit side and a payment side or credit side.All receipt of cash are entered on the debit side.While all payments of cash are entered on the credit side.

Form of Cash Book

The usual form of simple cash book is given below.It can be seen that cash book is simply a cash account when a cash book is maintained a separate cash account need not to be opened in the ledger.The cash book may be balanced just as any other ledger account.The balance represents ‘cash-in hand’ which should tally with actual cash  with the cashier.Thus the cash book serves two purposes

It is a subsidiary book, a book of original entry.

It is a principal book or book of final entry as it serves the purpose of ledger account as regards cash.

Cash Book

How to record receipt and payment in cash book?

When cash is received

When cash is received a receipt is prepared in duplicate or a counterfoil receipt is written up.The original is sent to person giving the cash and the duplicate or counterfoil retained in the office.Every receipt is serially numbered.On the basis of the duplicate receipt or the counterfoil, entries are made on the debit side of the cash book.Whenever cheque or bank draft or postal order is received it is treated as a receipt of cash.

When cash is paid 

When cash is paid to the person receiving the cash issues a receipt.This is the evidence for the payment and is known as voucher.Every voucher is serially numbered.On the basis of these vouchers,entries are made on the credit side of the cash book.The balance of the cash book will always be debit and represents cash in hand.It cannot have a credit balance because we cannot pay more than what we have received.

Download Cash book Format

Download cash book Format in Microsoft Excel

Comments (1)

  • Dear Sir
    Please if you can advise me solving the following point.
    As choosing (UK) VAT system when creating the company at start & activating the (BOM) for manufacturing as well for projects costing,I utilized the inventory voucher for the purpose of a project costing .
    When the project was sold & referring to the report (Statement of inventory) by choosing the Job Work Analysis,its supposed to indicate the value of Revenue (Income) at the top (A) The value of sales but not.
    At (B) Cost of Expenses its all well indicating.
    Please if you can help solving the issue so that the report Net Profit (A-B) indicates it.
    Your help will be much appreciated .
    Best Reg


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