RECORDING OF TRANSACTIONS

RECORDING OF TRANSACTIONS

ADVANTAGES OF MAINTAINING SUBSIDIARY BOOKS :

  • Division of work
  • Leads to Specialization
  • Easy to maintain Ledger
  • Check on frauds
  • Easy to fix responsibility
  • Quick availability of Required information.

CASH BOOK :

Cash book shows all the transactions related to cash receipts and payments. Cash book serves two purposes. First, all the cash transactions are recorded first time in cash book it becomes BOOK OF ORIGINAL ENTRY. Second, there is no need to prepare Cash a/c in ledger it also play the role of Principal Book.

Simple Cash Book :

All the cash receipts are shown in left hand side i.e. Debit side and all the cash payments are shown in right hand side i.e. Credit side.

Points to Remember :

  • Cash in hand/opening balance of cash is shown in Dr. side of the Cash book as "to Bal b/d".
  • Only transactions of cash receipts and payments are recorded in this book.
  • This book never show a credit balance because one can't pay more than the cash one have.
  • Illustrations 4

Enter the following transactions in a Simple Cash Book :

2011

 

2011

 

Jan. 1

Cash in Hand

12,000

Jan. 5

Received from Ram

3,000

Jan. 7

Paid rent

300

Jan. 8

Sold goods

3,000

Jan.10

Paid to Shyam

7,000

Jan. 15 Purchased goods

 

 

 

 

 

from Mohan

5,000

Jan. 27

Purchased

2,000

Jan. 31 Paid Salaries

1,000

 

furniture

 

 

 

 

Solution :

In the Books of...
CASH BOOK

Dr. Receipts     Payments   Cr.

Date

2011

Particulars

L.F.

Date

2011

Particulars

L.F.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jan. 1

Jan. 5

Jan. 8

 

 

 

 

Feb. 1

To Balance b/d

To Ram

To Sales A/c

 

 

 

 

To Balance b/d

12,000

3,000

3,000

 

 

 

Jan. 7

Jan.10

Jan. 27

Jan. 31

Jan. 31

 

 

 

 

By Rent A/c

By Shyam

By Furniture A/c

By Salaries A/c

By Balance c/d

 

 

300

7,000

2,000

1,000

7,700

 

18,000

18,000


7,700

Notes : One can draw the following conclusions :

  • In a Simple Cash Book only cash receipts and cash payments are recorded. Credit transactions are not recorded. Purchase from Mohan of j 5,000 on 15th Jan is a credit purchase hence, is not recorded in the Cash Book.
  • The debit side is always bigger than the credit side since the payments can never exceed the available cash. This is true even for daily balances.
  • It is like an ordinary account.

Cash book with Bank column

A two column cash book enable the management to know the cash and bank
balance instantly. In this book, amount column is divided into Cash and Bank columns.

Dr. FORMAT OF DOUBLE COLUMN CASH BOOK Cr.
Date Particulars V.N. L.F. Cash Bank Receipts side Date Particulars V.N.L.F Cash Bank Payments side

CBSE Accountancy Class XI ( By Mr. Aniruddh Maheshwari ) 
Email Id : [email protected]