Southern Business School (SBS)

Institute of Southern Punjab Multan

Assignment No: 8

Due Date: 23-6-20

Class: BBA 3rd Semester

Section: A

Subject: Financial Accounting

Student Name: Muhammad Rizwan

Complete Registration No: BBA-021R19-5

Submitted To: Mam Sonia Hassan

Explain the concept of cash book and petty cash?

Cash book:

The cash book is used to record receipts and payments of cash It works as a
book of original entry as well as a ledger account The entries related to receipt
and payment of cash are first recorded in the cash book and then posted to the
relevant ledger accounts Moreover a cash book is a substitute for cash account
in the ledger A company that properly maintains a cash book does not need to
open a cash account in its ledger

Types of cash book:

There are four major types of cash book that companies usually maintain to
account for their cash flows these are given below.

 A double/two column cash book to record cash as well as bank transactions.

 A triple/three column cash book to record cash bank and purchase discount
and sales discount.
 A petty cash book to record small day to day cash expenditures.
 A single column cash book to record only cash transactions.

Petty Cash Book:

Petty Cash Book is maintained to record small expenses such as postage

stationery telegram .A separate column is allotted for each type of expenditure
The difference between the total of the debit items and that of the total column
on the credit represents the balance of the petty cash in hand.

Explanation:

Generally in all business houses payments are made by cheque for battery
control over cash But the payment of small expenditures like stationery
traveling postage telegrams office teas and newspapers by cheque are impartial
Besides the above mentioned problem the chief cashier of a larger business has
to deal with numerous transactions of large amount daily If the chief cashier
records petty expenses in main cash book then chief cashier and main cash both
will be overburdened.To solve these problems the chief cashier delegates
responsibilities to some senior staff member for day to day small transactions
For this purpose he is given a small amount and a separate book to record these
small payments The book in which these small payments are recorded is called
Petty Cash Book The found that is used for small payments is known as Petty
Cash and the person who is responsible for makings small payment and
recording them is called Petty Cashier