Cash Book (An important Financial Record Book)

Each and every business unit mostly depends on Cash and Bank Account to meet their Receipt and Payment transaction. So, separate Books of Account are maintained for Cash and Bank transactions in place of Cash Journal, Cash Ledger, Bank Journal and Bank Ledger.

The Account Book, which is maintained in place of Cash Journal and Cash Ledger is called 'CASH BOOK'.

The Account Book, which is maintained in place of Bank Journal and Bank Ledger is called 'BANK BOOK'.

Let's do a brief discussion on Cash Book.

All the Cash Receipts and Cash Payments are recorded in Cash Book.

Receipts are recorded in Debit Side(Left hand side) of Cash Book.

Payments are recorded in Credit Side(Right hand side) of Cash Book.

Transactions which are recorded in Receipt Side :

• Cash Sales(Sale of Goods and Sale of Services/outward services)

• Cash Receipts from Debtors.

• Advance refund from Suppliers/Creditors through Cash.

• Cash Receipts from Sale of Fixed Assets.

• Cash withdrawals from Bank.

• Cash receipts on account of any other incomes etc.

Transactions which are recorded in Payment Side :

• Cash Purchases(Purchase of Goods and Receipt of Services/Inward Services).

• Cash Payment towards Direct Expenses such as Transportation Charges, Loading and Unloading Expenses etc.

• Cash Payment towards Indirect Expenses such as Salary & Wages, Bonus, Rent, Advertisement, Telephone Expenses, Electricity Charges, Printing & Stationery Expenses, Insurance Expenses, Travelling Expenses, Miscellaneous Expenses etc.

• Cash Deposits into Bank.

• Cash Payment to Supplier/Creditor.

• Advance Refund to Customers/Debtors by Cash.
  

• Any other Cash Payments.

Sample format of Cash Book with Example.

Generally a Cash Book consists of two sides.

1. The Left hand Side is Debit Side/Receipts Side.

   This side consists of four columns.

   • Date

   • Particulars

   • Folio Number

   • Amount

2. The Right Hand Side is Credit Side/Payments Side.

   This side consists of four columns.

   • Date

   • Particulars

   • Folio Number

   • Amount

Let's post these transactions into Cash Book of M/s.Shree Laxmi House, Bhubaneswar, Odisha(Whole sale and Retail Trader of Books and Magazines) for the Financial Year 2021-2022.

Opening Balance as on date.01/04/2021 ₹21520/-.

Date : 01/04/2021

Goods sold to Mr.Ranjit for ₹45315.00 for Cash as per Cash Memo No.001.

Date : 01/04/2021

Goods sold to Manisha Pandey for ₹34290/- for Cash as per Cash Memo No.002.

Date : 01/04/2021

Goods sold to Subham Bharat for ₹81360/- for Cash as per Cash Memo No.003.

All the above three transactions are Cash Receipt(Inward of Cash) for Business. So, these transactions should be entered in Receipt Side/Debit Side of Cash Book. 

Date : 01/04/2021

Amount paid for packing and forwarding expenses for ₹950/-.

Date : 01/04/2021

Deposited Cash into Indian Bank CA No-4023 ₹100000/-.

Date : 01/04/2021

Amount paid towards Mobile recharge for ₹500/-.

Date : 01/04/2021

Amount paid towards purchase of office stationery for ₹315/-.

All the above four transactions are Cash Payment(Outward of Cash) for Business. So, these transactions should be entered in Payment Side/Credit Side of Cash Book.

Date : 02/04/2021

Goods sold to Suman Kumari for ₹71860/- for Cash as per Cash Memo No.008.

The above transaction is a Cash Receipt(Inward of Cash) for Business. So, it should be entered in Receipt Side/Debit Side of Cash Book.

Date : 02/04/2021

Amount paid towards Advertisement for ₹2170/-.

Date : 02/04/2021

Deposited Cash into Indian Bank CA No-4023 ₹140000/-.

Date : 02/04/2021

Amount paid towards Computer repairing for ₹1200/-.

All the above three transactions are Cash Payment(Outward of Cash) for Business. So, these transactions should be entered in Payment Side/Credit Side of Cash Book.

Opening Balance for date.02/04/2021 is the value equal to Closing Balance of date.01/04/2021.