Topic: Cash Book

The cash book is used to record the receipts (money received) and payments of money by the
business in the form of cash or through the business’s bank account. It contains both cash and
bank A/c. The source document for cash transaction is called a receipt. Whereas the source
documents given for bank transactions are cheque, withdrawal slips, deposit slips/pay in slip and
bank statement.

Find out the function of each source document mentioned above. Copy functions in
notebook.

There are three types of cash book:

● 2 column cash book’

● 3 column cash book

● Petty cash book

NB: Whenever cash and bank are affected in the same transaction, for example, deposited cash
in business bank account, this is referred to as a contra entry. Contra entry occurs when two
accounts are affected in one account. In relation to the example, both cash and bank are affected
in the cashbook.

NB: Credit transactions would not be affected in the cash book.

*C signifies contra entra

Accounts Folio/ledgers

Credit Sales SJ/SL

Cash Sales GL

Credit purchases PJ/PL

Cash purchases GL

Assets GL
Capital GL

Expenses GL

R.I R.I.J/ SL

R.O R.O.J/PL

Drawings GL

Contra entry C
 Name of business or the owner of the business

2 column Cash book

date Details Folio Cash Bank Date Details Folio Cash Bank

2015 Other Page 500 500

account num of
May 1
affected in accounts
Date of transaction
GL 5
transactio
n
Debit side / in side out side / Credit side
Examples:
Business Name: Covid Ltd
2020
Jan 1 Started business with $10,000 by cash:
Jan 2 Sold goods on credit to N.Alexander 100: Sales and N.Alexander
Jan 3 Bought a motor vehicle by cash $1000
Jan 6 Deposited 5000 cash into the bank
Jan 10 paid motor expenses by cash 500: