A PROJECT WORK

ON
PREPARATION OF CASH BOOK

SUBMITTED TO CHSE, ODISHA FOR FULIFILMENT OF AHSE-2022

SUBMITTED BY:

Name : Ankita Priyadarshini

CLASS: +2 2nd Year
COLLEGE ROLL NO: IC20-015
REGD: NO.:MA19C20015 CHSE ROLL NO :

GUIDED BY:
MISS PRARTHANA MISHRA

DEPARTMENT OF COMMERCE
KAMALA NEHRU WOMEN`S HIGHER SECONDARY SCHOOL,
SESSION: 2020-22
BHUBANESWAR

Signatures of the Student

Sign of the External Evaluator Sign of Internal Evaluator

 CERTIFICATE

This is to certify that ANKITA PRIYADARSHINI is the student of +2 2 nd

Year Commerce in Higher Secondary Examination of CHSE ,Odisha
has satisfactorily carried and conducted her Dissertation entitled
“PREPARATION OF CASH BOOK” .She has completed her Dissertation
work under my guidance and supervision. The project work is the
outcome of her work.

We wish her a successful career.

Authorized Signatory

Place: Miss Prarthana Mishra

Date: (Project Guide)

 DECLARATION

I ANKITA PRIYADARSHINI , College Roll No. IC20-015, a student of the

+2 2nd Year Commerce of Higher Secondary Examination of CHSE,
Odisha do hereby declare that the present study was undertaken by
me under the guidance of Miss Prarthana Mishra , KAMALA NEHRU
WOMEN`S HIGHER SECONDARY SCHOOL , Bhubaneswar and the
project report entitled “PREPARATION OF CASH BOOK ” is of my own
and has neither been submitted to this nor any other institution any
where previously.

Ankita Priyadarshini

Roll No : IC20-015
 ACKNOWLEDGEMENT

I would like to express my special thanks of my teacher Miss

Prarthana Mishra, who gave me the golden opportunity to do this
wonderful project of “preparation of cash book” and also helped me in
completing my project. I came to know about so many new things I
am really thankful to her. Secondly, I would also like to thank my
parents and friends who helped me a lot in finalizing the project within
limited time frame.

Ankita Priyadarshini

+2 2nd Year Commerce

 CONTENTS

Sl No. Title Page No.

1. Introduction 01

2. Features 02

3. Advantage of cash book 03

4. Types of cash book 04

5. Objective 05

6. Methodology 05

7. Problem Statement 07

8. Conclusion 09

9. References 10
Introduction:

A cash book is a separate ledger in which cash transactions are

recorded, whereas a cash account is an account within a general ledger. A
cash book serves the purpose of both the journal and ledger, whereas a cash
account is structured like a ledger. Maintaining of cash book removes the
necessity of having cash and bank accounts in the ledger this book enables
us to know the balance of cash in hand and at bank at any point of time. All
transactions in a cash book have two sides: debit and credit. All cash
receipts are recorded on the left-hand side as a debit, and all cash
payments are recorded by date on the right-hand side as a credit. The
difference between the left and right sides shows the balance of cash on
hand, which should be a net debit balance if cash flow is positive.

Cash book may be describe as a primary book meant for recording all
cash (including bank) transactions date-wise. It also servers the purpose of
ledger. The need for a separate cash book is important because of the
following reasons :

 Number of transactions, in every business, relating to cash is quite

large;
 Cash as an asset is prone to fraud, it is very tempting for any one to
embezzle cash;

Features:

The following are the most important features of a cash book :

1. Cash column must have debit balance (if any) whereas bank column
may have debit or credit balance depending upon whether bank
balance is positive or overdraft.
2. It is a book of original entry and a book of final entry, so, it performs
the role of journal and ledger.
3. Receipts are recorded on debit side and payments on credit side.
 4. It records only one aspect of the transaction i.e. cash and bank;
double entry is completed by means of posting in the ledger to the
respective account.
5. Transactions are being recorded in chronological order.

Advantages of Cash Book:

The following are the advantages of cash book :

(1) It prevents duplication of work in entering cash transaction in journal

and posting the same into the ledger.
(2) Cash and bank transactions (both) can be recorded in cash book.
(3) It helps in saving time and labour by reducing workload.
(4) Because cash and bank accounts are out of the main ledger, it keeps
the general ledger of manageable size.

Types of Cash Book :

The Cash Book is set up in columns. There are three common versions of
cash book and they are :

 Single column cash book (cash columns).

 Double column cash book (cash and discount columns).
 Triple column cash book (cash, discount and bank columns).

Single Column Cash Book :

This is the most simple form of cash book which keeps a record of
only cash transaction. This is also known as simple cash book. A single
column cash book has only one money column on the debit and credit sides
to record cash transactions. This is the reason why it is called a single
column cash book (or a simple cash book).This form of cash book has the
same ruling as that of a ledger account. There is no need of having a cash
account in the ledger. The purpose is ably served by cash book itself.
Posting form debit (receipt) side of the cash book is done to the credit side of
concerned accounts and from the credit side of cash book to the debit side
of concerned accounts.

Double Column Cash Book :

As the phenomenon of offering and accepting cash discount is

intimately associated with act of receipt and payment of cash, the utility of
cash book increases if the column of discount are also provided in it. Cash
book having additional columns for discount is known as double column
cash book. The discount column on the debit side of the cash book
represents the discount allowed to debtors while the discount column on the
credit side represents discount received from creditors.

Triple Column Cash Book:

These days it is difficult to carry on any business without

having dealing with the bank. Normally bulk of its funds is kept by the
business at a bank in a current account where frequent withdrawals and
deposits are permitted. Bank transactions, i.e., payments into and out of
bank are more numerous than cash transactions. Therefore, it is
appropriate as well as convenient that cash book should have an additional
column on each side to record money deposited at bank and payments out
of the bank. A three column cash book, also known as a triple column cash
book, contains three money columns on both the debit and credit sides: one
on each side for recording discount, cash, and bank amounts.
Dr. Cash Book Cr.
Date Particulars L/F Disc. Cash Bank Date Particulars L/F Disc. Cash Bank
2021 ₹ ₹ ₹ 2021 ₹ ₹ ₹
May 1 To Balance b/d XXX May 1 By Balance b/d XXX
May 3 To Sales a/c XXX May 2 By Postage a/c XXX
May 3 To Cash XXX May 2 By Repairs a/c XXX
May 10 To Laxman XXX XXX May 2 By Rakesh XXX XXX
May 15 To balance c/d XXX May 3 By Bank
C
May 8 By Purchases a/c XXX
May 8 By Rent a/c XXX XXX
XXX
May 8 By Wages a/c
C
May 13 By Rates a/c XXX XXX
May 13 By Drawings a/c XXX
May 15 By Balance c/d

XXX XXX XXX XXX XXX XXX

Specimen copy for Triple Column Cash Book

Objective of the Study:

A business must have strict financial rules and accounting system to

perform , record, report and control the cash and banking transactions.
Proper recording and accounting of cash and banking transactions are
important to achieve the following objectives.

 To obtain reliable and detailed information of all cash receipts and

payments easily and immediately.
 To know the main sources and heads of payment of cash.
 To know cash and bank balances.
 To have systematic and permanent record of all cash and banking
transactions in a separate book.
 To keep effective control over misappropriation of cash and banking
transaction.

Methodology of the Study:

In order to prepare a cash book here we are going to discuss about some of
the practical problems and about its solution as per our syllabus. Here we
take the problem example and its solution as referred in our book of
Accountancy. Here we are using Triple Column Cash Book method to
prepare cash book for any business enterprise.
Problem 1: On May 1 2021 Ramesh had ₹2,750 in his cash box and was
overdraws at the bank by ₹27,065. Enter these opening balances in his cash
book and then record the following transactions. Balance of the cash book
on May 15.

2021

May 2 Paid for postage stamps ₹260 in cash, paid for repairs ₹147 in cash,
paid to Rakesh a cheque for ₹2,710, who gave discount ₹190.

May 3 Cash sales ₹8,770; paid ₹5,030 out of cash box into the bank.

May 8 Bought goods by cheque at an auction ₹1750; paid rent for the
month ₹2,950 by cheque; paid ₹1,000 in cash.

May 10 Laxman paid by cheque ₹9,710 in full settlement of ₹10,000.

May 13 Rates paid by cheque ₹2,265; drawn for personal use from cash box,
₹1,500.
Solution:

Dr. Cash Book Cr.

Date Particulars L/F Disc. Cash Bank Date Particulars L/F Disc. Cash Bank
2021 ₹ ₹ ₹ 2021 ₹ ₹ ₹
May 1 To Balance b/d 2,750 May 1 By Balance b/d 27,065
May 3 To Sales a/c 8,770 May 2 By Postage a/c 260
May 3 To Cash 5,030 May 2 By Repairs a/c 147
May 10 To Laxman 290 9,710 May 2 By Rakesh 2,710
May 15 To balance c/d 22,000 May 3 By Bank 5,030
C
May 8 By Purchases a/c 1,750
May 8 By Rent a/c 2,950
190
May 8 By Wages a/c 1,000
C
May 13 By Rates a/c 2,265
May 13 By Drawings a/c 1,500
May 15 By Balance c/d 3,583

290 11,520 36,740 190 11,520 36,740

Conclusion:

From the above study it is found that the total cash receipts and payments
of the business are easily known at any time from the cash book. The
amount of cash in hand may be known at any time without having to count
the cash box if the cash book is properly maintained. Since the Cash Book
is both a Journal and a Ledger, it is possible to take advantage of both the
Journal and Ledger from the Cash Book. Since all cash transactions are
recorded in one place in the cash book, it is not difficult to obtain any
information about the cash transaction in the future.I t is very easy to
calculate the amount of cash in hand at any time from the cash book, and it
can be compared to the money in the cash box so that the accuracy of the
account and any kind of fraud can be easily caught. The cash book may also
be used to preserve the initial and accurate accounts of cash transactions.
Maintaining cash books can help prevent labor and time loss. Cash security
can be ensured as the cash balance of the cash book must be reconciled
with the cash balance of the fund. It’s easy to detect any errors, as all cash
transactions are recorded in the cash book. The cash book shows the
amount of money that’s lying idle in the business. As a result, idle cash can
be invested at any time in any other business. If the cash book is
maintained properly, the preparation of the Journal and Ledger may be
avoided. Since all types of cash transactions are recorded in the Cash Book,
any cash transaction information relating to expenses is available from the
Cash Book at any time in the future.As soon as cash transactions are
completed, they can be recorded directly in the cash book without entering
the journal book. As a result, the organization does not need to prepare a lot
of journal entries.

All the owners of the business give strict orders to the accountants to
balance cash funds on a daily basis in the business. As a result, a business
organization can find out the amount of its cash on a daily basis.
 REFERENCES

 C.MOHAN JUNEJA, Formerly Head (POST Graduate)Deptt. Of

Commerce and Business Administration, D.A.V College, Jalandhar,
Head Deptt.of Management Studies, C.T.Institurte of Engineering ,
Management and Technology, Shahpur, Jalandhar.
 R.C.Chawla, Ex- Principal, Givt. Bikram College of Commerce, Patiala,
 Dr. J.S.Arora, (M.Com, MBA, Ph.D, FMCA, PGDLL & PM, DOOP,
PGDEITM, PGDIM, PGDFM,DIM,CCU,CCF), Associate Professor, Pg
Deptt. of Commerce and Business Administration, Khalsa College,
Amritsar, Ex-Principal, Khalsa College, Mohali,
 Prof. P.C.Sahoo,M.Com, M.Phil (Utkal), Deptt. of Commerce and
Management Studies, Kendrapara (Autonomous) College, Kendrapara,
Odisha