News Types Of Cash Book
There are 3 types of cash book:
1. Simple Cash Book
2. Two Column Cash Book
3. Treble/Three Column Cash Book
4. Petty Cash Book.
1. Simple Cash Book:
Simple cash volume contains solely i total column on each side (debit in addition to credit) for recording cash receipts in addition to cash payments.
A format of uncomplicated cash volume is given below:
For recording transactions inward the uncomplicated cash book, the initiatory stride is to sympathize the dominion for recording transactions i.e., which concern human relationship is to hold upward debited in addition to which concern human relationship is to hold upward credited.
Rules for Recording Transactions:
Cash volume is equally good a cash concern human relationship in addition to in that place are ii approaches for recording concern transactions inward the books of accounts. One is ‘Traditional Approach’ in addition to the other is ‘Equation Based Approach.
Under traditional approach, cash is a existent concern human relationship in addition to thus that next the rule: ‘Debit what comes inward in addition to credit what goes out’, receipt of cash is to hold upward debited (i.e., cash comes in) inward the cash volume in addition to payment of cash is to hold upward credited (i.e., cash goes out).
Similarly, inward the equation based approach, cash is an property in addition to next the rule: ‘Increase inward property is to hold upward debited in addition to decrease inward property is to hold upward credited’, receipt of cash is debited (i.e., increment inward cash) in addition to payment of cash is to hold upward credited (i.e., decrease inward cash) inward the cash book.
2. Double Column Cash Book (Cash Book amongst Bank Column)
Simple cash volume amongst unmarried total column on either side is maintained if the scheme has solely cash transactions. However, due to safety in addition to legal bindings, sometimes the transactions select to hold upward necessarily routed through banks. The receipt issued past times the cashier is the root document for cash receipts.
Any document viz., invoice, mouth receipt etc., through which payment has been made, volition serve equally a root document for payment. These documents, popularly known equally vouchers are numbered serially in addition to filed inward a assort file for time to come reference, verification in addition to audit.
Bank facilitates a concern corporation to opened upward electrical flow concern human relationship inward which the concern corporation tin flaming take total inward excess of what is available inward the electrical flow account. In that example transactions related to cash in addition to banks are to hold upward recorded separately inward a cash volume in addition to thus that at whatsoever detail catamenia of time, cash residue available inward the cash breast in addition to depository fiscal establishment residue available inward the depository fiscal establishment concern human relationship tin flaming hold upward known immediately.
It is ameliorate to tape transactions relating to both cash in addition to depository fiscal establishment inward the same cash book. For this purpose, i to a greater extent than total column for recording depository fiscal establishment transaction is to hold upward added on both sides of the cash book. This is known equally depository fiscal establishment column. Under depository fiscal establishment column of the cash book, cash transactions routed through depository fiscal establishment are recorded.
A format of cash volume amongst depository fiscal establishment column is given below:
Similar to uncomplicated cash book, cash transactions are recorded inward the ii column cash book. The divergence is that hither nosotros equally good tape banking transactions i.e., the transactions inward which depository fiscal establishment is equally good involved.
Rule for Recording Transactions:
Entries inward the cash column are recorded like to recording transactions inward the uncomplicated cash book. For recording depository fiscal establishment transactions in that place are ii approaches. One is ‘Traditional Approach’ in addition to the other is ‘Equation Based Approach’. Under traditional approach, depository fiscal establishment is personal concern human relationship in addition to thus that equally per the rule: ‘Debit the receiver in addition to credit the giver’, receipt of cash past times the depository fiscal establishment is to hold upward debited (i.e., debit the receiver) inward the cash volume in addition to payment of cash past times the depository fiscal establishment is to hold upward credited (i.e., credit the giver).
However, inward the equation based approach, depository fiscal establishment is an property in addition to the rule: ‘Increase inward property is to hold upward debited in addition to decrease inward property is to hold upward credited’, volition hold upward followed. If inward a transaction, depository fiscal establishment column increases, depository fiscal establishment column of the cash volume is to hold upward debited (i.e., increment inward bank) in addition to decrease inward depository fiscal establishment column is to hold upward credited (i.e., decrease inward bank) inward the cash book.
3. Treble/Three Column Cash Book
When cash is received from the debtors, discount may hold upward allowed to them. And when cash is paid to creditors, discount may hold upward received from them. It agency the cash in addition to the discount are real much related to each other. Another interesting matter is that when the cash is received, the discount is allowed in addition to both cash concern human relationship in addition to discount concern human relationship are debited. On the other hand, when the cash is paid, the discount is received in addition to both the cash concern human relationship in addition to the discount concern human relationship are credited inward the books of account. Thus inward "Double Column Cash Book roughly other 'amount' column is provided on each side to tape discount allowed in addition to discount received". It agency the Cash Book at nowadays volition select 3 "Amount Columns on each side, i.e. Cash Column, Bank Column in addition to Discount Allowed Column on the debit side in addition to Cash Column, Bank Column in addition to Discount Received Column on the credit side.
It may equally good hold upward noted that when 'Discount' Column is added amongst both sides of Double Column Cash Book it becomes a "Treble or Three Column Cash Book".
It must hold upward remembered that the Discount Column inward Treble Column Cash Book is non an account. Both the Discount Allowed Account in addition to Discount Received Account are opened inward the ordinary Ledger. These columns are memorandum columns only; they aid us yell back how much discount has been allowed or received. The totals of discount allowed in addition to discount received columns from ii sides of Cash Book are posted inward Discount Allowed A/c in addition to Discount Received A/c respectively inward the Ledger.
Format:
4. Petty Cash Book
Petty cash volume is a variety of cash volume which records large number of small-scale payments such equally conveyance, cartage, postage, telegrams in addition to other expenses nether the imprest system. These expenses are repetitive inward nature. The physical care for becomes cumbersome if all small-scale in addition to repetitive payments are handled past times the principal cashier in addition to are recorded inward the principal cash book.
The cash volume may locomote past times real bulky in addition to the cashier may hold upward overburdened. Applying the dominion of ‘management past times exception’ the principal cashier should non hold upward disturbed for small-scale in addition to footling items.
Big organizations usually appoint i or to a greater extent than cashier known equally ‘Petty Cashier’ in addition to assign the treatment of footling expenses. Sometimes the piece of occupation of treatment small-scale in addition to footling expenses is assigned to an existing employee who inward add-on to his normal duties maintains a assort cash volume to tape these footling in addition to small-scale cash transactions. For this operate footling cash volume is to hold upward maintained past times such employee. The footling cashier in addition to thus appointed for recording the small-scale in addition to footling expenses industrial plant on the imprest system.
Format:
Source: http://www.accountingnotes.net/cash-book/top-3-types-of-cash-books-with-specimen/3951