AccountingAccounting Explanation

Cash Book: Definition, Types of Cash Book, Example, Format of Cash Books

A cash book is a type of a financial diary in which all cash receipts and expenditures, including bank deposits and withdrawals, are recorded. It is a subsidiary ledger that stores all cash receipts and payment transactions. Cash books are used to record the cash receipts and payments of money that have been received or paid out. 

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The cash book records all cash transactions, including amounts placed in and withdrawn from the bank. It is a book of original entries and details must be transferred to journals for posting to ledgers. 

The purpose of a cash book is to manage cash efficiently and budget effectively. Cash books can have credit or debit entries depending on the type of transaction. There are three types of cash books: single-column, double-column, and triple-column.

Single Column Cash Book

The single column cash book is a book that lists only cash transactions. It has only one column for recording transactions, and it looks like any other cash account. All cash receipts are on the left side, while all cash payments are on the right. The single column cash book is also referred to as a simple cash book shaped like a T account.

Single Column Cash Book Definition

The single column cash book has only one money column, which is totalled and balanced like a traditional T-account. At the end of each month or another appropriate period, the amount column of both sides is totalled. The difference between totals is written on the lighter side below all other entries.

Single Column Cash Book Example

1/1/2023Cash in hand$100
2/1/2023Stationery purchased$30
5/1/2023Rent paid$50
15/1/2023Wages paid$50
20/1/2023Purchase of equipment$200
25/1/2023Repairs and maintenance$30
31/1/2023Bank balance$540

Single Column Cash Book Format

The format of a single column cash book is very simple. The book is divided into two equal parts vertically. The receipts are entered on the left (debit) side, and payments are entered on the right (credit) side. A single-column cash book is a typical format.

Date | Particulars | Amount | Date | Particulars | Amount

Advantages of the Single Column Cash Book

The following are some of the benefits of adopting a single-column cash book:

Simple: The single-column cash book is incredibly straightforward and simple to use. So it is an excellent choice for small businesses that don’t have a lot of cash transactions.

Easy to maintain: Since the single column cash book has only one column, it’s easy to maintain and doesn’t require a lot of time.

Saves time: With the single column cash book, you don’t need to prepare separate ledgers for cash receipts and payments. It saves a lot of time and effort.

Helps in tracking cash flow: The single column cash book helps in keeping track of cash inflows and outflows, making it easier to manage cash flow.

Double Column Cash Book

A double-column cash book is a type of cash book that has an additional column reserved for discounts. So it is used to record all cash transactions, including bank transactions and discounts received or allowed. 

A double-column cash book has two columns on the debit side and two columns on the credit side. The first column records the cash transactions, while the second column records bank transactions or discounts. 

A double column cash book includes its ability to provide detailed information about transactions, easy identification of errors, and efficient recording of both bank and cash transactions.

A Double Column Cash Book, also known as a Two Column Cash Book, is an accounting book used to record both cash and bank transactions. It has two columns on each side – one to record cash transactions and the other to record bank transactions. So by having both accounts in one place. It makes the things much easier to keep track of your finances and other records created to these.

Format: How to Set Up a Double Column Cash Book

Setting up a Double Column Cash Book is easy! Simply draw a vertical line down the middle of a page to create two columns. Cash transactions are recorded in the left-hand column. Other hand, bank transactions are recorded in the right-side column. So that there should be always two sub-columns in each column. One is for debt and the other one is for credit. So this format makes it easy to record and track your financial transactions.

Advantages of Double Column Cash Book

There are many advantages to using a Double Column Cash Book. Here are just a few:

Convenience: By keeping your cash and bank accounts side by side in one place, it is much more convenient to keep track of your finances. So no more flipping back and forth between accounts to reconcile transactions!

Time-Saving: With a Double Column Cash Book, there is no need to maintain separate bank accounts. This saves time and effort that can be used to focus on other important aspects of your business.

Cost-Effective: By not maintaining separate bank accounts, you can save money on fees associated with opening and maintaining multiple accounts.

Contra Entry Option: The Double Column Cash Book allows for contra entries. So it means that if you deposit or withdraw cash from the bank, you can record it in the same book.

Disadvantages of Double Column Cash Book

While there are many advantages to using a Double Column Cash Book, there are also some disadvantages to consider:

Limited Space: With only two columns available, there is limited space to record transactions. So if you have lot of transactions, then you may need to use multiple books or consider using a unique accounting system.

Lack of Detail: Because the Double Column Cash Book only has two columns, there is a lack of detail in the recording of transactions. This may not be suitable for larger businesses or those that require more in-depth reporting.

Requires Careful Recording: Since the Double Column Cash Book records both cash and bank transactions, it requires careful and accurate recording to avoid errors.

Triple-Column Cash Book 

A triple-column cash book, also known as a three column cash book, is the most comprehensive form of a cash book that has three money columns on both the debit and credit sides. It records all cash transactions, including bank transactions, discounts received or allowed, and taxes paid or collected. 

The format of a triple column cash book includes three columns on the debit side and three columns on the credit side. 

  • The first column records the date and particulars of the transaction, 
  • The second column records bank transactions or discounts
  • The third column records taxes paid or collected

Triple column cash books are useful for businesses that deal with many transactions and require detailed information about their finances.

A Triple Column Cash Book is a book that has three money columns on both the debit and credit sides of the book. These columns are cash, bank, and discount. In short, if we add a discount column to the double-column cash book, it becomes a Triple Column Cash Book. The book is used to record cash transactions in a business, and it helps in the management of cash inflows and outflows.

Triple Column Cash Book Example

Let’s take an example of a Triple Column Cash Book to understand it better.


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