Cash book is a book of original entry in which all the business transactions relating to cash receipts and payments are recorded in chronological order. Cash receipt is entered on the debit side and cash payment is recorded on credit side of the book.
There are 3 Types of Cash Books
- Single Column.
- Two Column.
- Three Column.
1. Single Column
In this all the items on the debit side of the Book are posted to the credit and those on the credit side are posted to the debit side of the respective ledger accounts affected. It is balanced regularly, mostly daily and the balance should be equal to cash in hand. The cashbook will always show debit balance only.
This record only cash receipts and payments. It has only one money column on debit and credit side. Cash received is entered on the debit side and cash payments are entered on the credit side.
2. Two Column Cash Book
This type of cashbook has two columns it has cash column and discount column. Usually cash discount is allowed or received when payment is made. So, it is necessary to record this fact at the same place where the cash transaction is recorded.
It except that one additional column on each side is provided for recording cash discount. As discount is a nominal account, discount allowed being a loss is shown on the debit side and discount received being a gain is shown on the credit side. It has two columns of cash and discount on both the debit and credit side.
3. Three Column Cash Book
Every Businessman has a minimum of on current account in the bank. it is a very convenient way for him to get paid by cheque and make payment to others by cheque. So, he has to record these payments and receipts in the cash book for this an additional column will require name bank column. So now total three column will be required to record proper payment and receipts in the cash book these are shown below
- Cash Column
- Bank Column
- Discount Column