What is a cash book?

Before talking about the cash book, we would briefly explain what is cash. Cash is a current asset which consists of items used in day to day financial transactions as medium of exchange. In accounting and finance, cash includes, currency notes made of paper, coins, demand deposits, money orders, checks and bank overdrafts etc.

The following items cannot be treated as cash:

  • Dishonored checks
  • Post-dated checks
  • Postage stumps
  • Securities and special investments
  • Trade advances to enployees

The cash balance in a business organization is of significant importance due to the following reasons:

  1. It is readily available to meet current obligations of any business organization.
  2. It is universally accepted as a mode of payment by creditors.
  3. The economic activities of any business involve a regular inflow and outflow of cash and cash equivalents.

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:

  1. A single column cash book to record only cash transactions.
  2. A double/two column cash book to record cash as well as bank transactions.
  3. A triple/three column cash book to record cash, bank and purchase discount and sales discount.
  4. A petty cash book to record small day to day cash expenditures.
By Rashid Javed (M.Com, ACMA)
Show your love for us by sharing our contents.
A D V E R T I S E M E N T

50 Comments on What is a cash book?

    1. mande Hannah

      cash book is a current asset of items which consists in day by day fianancial transactions as medium of exchange

    2. olu

      cash book is used to record reciep and payment of cash

    3. Jubril jimoh

      Cash book is a book used to record the receipt and payment of cash

  1. adnan mohamed

    which of the following statement is not true?
    1.cash book is a journal as well as a ledger
    2.cash account shows either credit or debit balance
    3.only cash transactions are recorded in cash book
    4.bank account shows either debit or credit balance
    please tell the aswer for this question

    1. Accounting For Management

      The answer is: 2
      The cash account will always show a debit balance and will never show a credit balance.

      1. yusif

        what about a bank overdraft

    2. MAKIRI OGOLA

      only cash transactions are recorded in cash book.

      1. Bare adan hashi

        I want to know how to prepare for cash book column

    3. Balram Chaudhary

      Ans.2 Only debit balance show

    4. Vivekananda Mohanty

      Ans is 2

    5. LAYTOYA DIXON

      NUMBER ONE IS WRONG

    6. Sabangan

      The answer is 2, because balances are shown in the ledger,

    7. bongo

      1. Cash book is a journal as well as a ledger

    8. bongo

      The answer is option 3. But it could be also correct if the cash we are talking of consist of bank transactions.

    9. David kuol

      number 2 statement is not a true statement.

    10. MIR FAISAL

      Statement 1 is true
      Cash book is a journal as well as a ledger

    11. Sudharshan Rao B

      2 . Is not true.Reason Cash account can only show debit balance or zero balance but not credit balance. It is based on the fact you cannot pay when you have spent all your hard currency.

  2. muhaimin

    HI, what about let say for logistic, your are sending the item for delivery at post office so…..Credit cash ( payment ) and Debit delivery ?

  3. AMYAUNG

    What is Cash Book for all bank Account?

  4. swetha

    it is very useful and informative thank u so much

  5. swetha bharat

    Nice and informative

  6. swetha bharat

    EXPLANATION CAN BE MORE DETAILED

  7. ISHANNA

    WOW I UNDERSTOOD VERY EASILY

  8. samrat singh ratore

    very beautifully explained thank u so much for such nice explanation

  9. al ameen muktar

    and also thank u

  10. Na'a nribet Yoila

    I will be always here to be current

  11. joseph

    trust book will soon be invented

  12. kigbu shedrack

    cash book: is a book of account that record all day to day transaction made during a period of time

  13. Thabiso Mabote

    I want to download information

  14. Muriel Mandega

    what are the methods to manage these cashbook

  15. Sabangan

    Cashbook is a journal as well as a ledger, explain.

  16. Lamido muhammad umar

    Cash book is manage and control only by a treasurer

  17. Nanjala Elizabeth

    The cash book is the ledger that contains the cash and bank accounts only.

  18. Jonathan

    I took over from a colleague some weeks ago as Head of finance and recently realized that the
    Cashbook he handed over to me can not be found, what should i do and what are the consequences?

  19. Mirr

    Do we record any sales return in the cash book? If yes, is it in the debit or credit side?

  20. joshua omokayode

    it all making sense now

  21. patrik

    cash book is a record book

  22. Kunal Sahu

    Why Cash Book is not necessary to open a Cash Account in the Ledger ?

  23. Godgift David Aquah

    cash book is a book use in recording day to day transaction on cash

  24. Muhammed jamiu

    Cash book is the book of original or book of prime entry used in recording cash receipt and cash payment.

  25. Alvaro Cairney

    Trial balance and ledger which one is an account?

Leave a comment