Cash Book plays dual role as a book of original entry as well as a ledger. It is a subsidiary book because all cash transactions are first recorded in the Cash Book and then from Cash Book posted to various accounts in the ledger.
The recording of transactions in the Cash Book takes the shape of Ledger Account as receipts of cash are entered on the debit side and payments of cash on the credit side, so there is no need of Cash Account in the Ledger. Therefore, Cash Book serves the purpose of a ledger account.
From the above, you should be able to understand that Cash Book fulfils the functions of both subsidiary book and ledger.
The following are the three types of Cash Book
This type of Cash Book makes a record of all the receipts and payments of cash. All cash received in the form of coin, notes, cheques, postal orders, bank drafts will be recorded on the debit side and payments on the credit side.
The recording of transactions in the Cash Book takes the shape of Ledger Account as receipts of cash are entered on the debit side and payments of cash on the credit side, so there is no need of Cash Account in the Ledger. Therefore, Cash Book serves the purpose of a ledger account.
From the above, you should be able to understand that Cash Book fulfils the functions of both subsidiary book and ledger.
Types of Cash Book
The following are the three types of Cash Book
- Simple Cash Book
- Cash Book with two columns.
- Cash Book with bank and discount columns
Simple Cash Book
This type of Cash Book makes a record of all the receipts and payments of cash. All cash received in the form of coin, notes, cheques, postal orders, bank drafts will be recorded on the debit side and payments on the credit side.
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