2. Double Entry System 2 DRCR

3. CASH BOOK

4. know what is the purpose of a Cash Book. draw up a Two-column and a Three-column Cash Book. distinguish between a cash and a trade discount. Objectives At the end of the lesson, students should be able to :

5. What is a Cash Book? It forms part of the ledger book. Contains only 2 ledger accounts: - Cash account - Bank account It is a book of original entry without the need to go through the Journal.

6. Advantages of using a Cash Book Reduces the number of entries in the ledger book. One person can be in charge of the book, thus increasing efficiency. It is easier to refer to the Cash account and Bank account when using a separate book to record.

7. A Simple Two-column Cash Book Dr Cr Two-column Cash Book Date Particulars Cash Bank Date Particulars Cash Bank

8. Tell A Story… father mum Yourself

9. The list price is $60 What about $50? ok lah. Shopping Centre

10. TRADE DISCOUNT The $60 is the list price. The actual price that you paid was $50 after bargaining. The Trade Discount is the difference, $10. Do you record the Trade Discount? Why not? NO!! We are concerned with the final actual amount to be paid for, not the original list price or the discount given after bargaining.

11. CASH DISCOUNT Cash Discount, however, is to encourage early payment from debtors. It is dependent on how early a debtor pays his debt. The earlier, the higher the amount of cash discount will be given. Unlike Trade Discount, Cash Discount is recorded in the books. Discount Received- If the firm received a discount for early payment to creditors. Discount Allowed- If the firm allowed a discount on their debtors for early payment.

12. Dr Cr Three-column Cash Book Date Particulars DA Cash Bank Date Particulars DR Cash Bank Discount Allowed Discount Received A Simple Three-column Cash Book

13. Discount Allowed: Dr Discount Allowed Cr Debtors Discount Received: Dr Creditors Cr Discount Received

14. Can you still remember what you have learnt today?