1. Subsidiary Books - Cash Transaction Samir K Mahajan

2. CASH BOOK A cash book is a special journal which is used to record all cash receipts and cash payments. The cash book is a book of original entry or prime entry since transactions are recorded for the first time from the source documents. The cash book is a ledger in the sense that it is designed in the form of a cash account and records cash receipts on the debit side and cash payments on the credit side. Thus, the cash book is both a journal and a ledger. Cash Book will always show DEBIT BALANCE as cash payments can never exceed cash available. Samir K Mahajan

3. KINDS OF CASH BOOK Subsidiary Books - Cash Transaction  Single Column Cash Book  Double Column Cash Book o Cash book with discount and cash columns o Cash book with cash and bank columns o Cash book with discount and bank columns  Triple Column Cash Book with cash, bank and discount columns  Petty cash Book Samir K Mahajan

4. SINGLE COLUMN CASH BOOK Single column cash book (simple cash book) has one amount column in each side. All cash receipts are recorded on the debit side and all cash payments on the credit side. In fact, this book is nothing but a Cash Account. Hence, there is no need to open cash account in the ledger. Debit Side Single Column Cash Book of...........Credit side DateParticularR.N.L.F.Amount (Rs) DateParticularV.N.L.F.Amount (Rs) Samir K Mahajan

5. SINGLE COLUMN CASH BOOK contd. i. Date : This column appears in both the debit and credit side. It records the date of receiving cash at debit side and paying cash at credit side. ii. Particulars :This column is used at both debit and credit side. It records the names of parties (personal account), heads (nominal account) and items (real account) from whom payment has been received and to whom payment has been made. iii. Receipt Number (R.N):This refers to the serial number of the cash receipt. iv. Voucher Number (V.N) :This refers to the serial number of the voucher for which payment is made. v. Ledger Folio (L.F):This column is used in both the debit and credit side of cash book. The ledger page (folio) of every account in the cash book is recorded against it. vi. Amount :This column appears in both sides of the cash book. The actual amount of cash receipt is recorded on the debit side. The actual payments are entered on the credit side. Samir K Mahajan

6. Balancing : The cash book is balanced like any other account. The total of the receipt (debit side) column will always be greater than the total of the payment column (credit side). In the beginning of the next period, to show the cash balance in hand, the balance amount is recorded in the debit side as “To balance b/d or c/f”. The difference will be written on the credit side as “By Balance c/d or b/f”. SINGLE COLUMN CASH BOOK contd. Samir K Mahajan

7. SINGLE COLUMN CASH BOOK: EXAMPLE Enter the following transactions in a Single column Cash Book 1980 Jan 1 : Cash in hand ------------- Rs 11200 Jan.5 : Received from Akash ---- Rs 300 Jan 7 : paid rent --------------------- Rs 30 Jan 8 : sold goods ------------------ Rs 300 Jan10 : Paid TanishQ----------------- Rs 700 Jan 27: Purchased furniture ------- Rs 200 Jan 31 : paid salaries ---------------------- Rs 100 Samir K Mahajan

8. SINGLE COLUMN CASH BOOK: EXAMPLE Cash Book of ________ Dr Receipts paymentsCr DateParticularR.N.L.F.Amount (Rs) DateParticularV.N.L.F.Amount (Rs) 1980 Jan 1 Jan.5 Jan. 8 Feb 1 To Balance b/d To Akash To Sales To Balance b /d 11 200 300 1980 Jan. 7 Jan. 10 Jan. 27 Jan. 31 Jan 31 By rents By TanishQ By Furniture By Salaries By Balance c/d 30 700 200 100 10770 11800 10,770 Samir K Mahajan

9. DOUBLE COLUMNS CASH BOOK/CASH CASH BOOK WITH DISCOUNT AND CASH COLUMNS On either side of the single column cash book, another column is added to record discount allowed and discount received. Debit Side (Cash book with Discount and Cash Column )Credit side DateParticularR.N.L.F.Discount Allowed (Rs) Amount (Rs) DateParticularV.N.L.F.Discount Received (Rs) Amount (Rs) Samir K Mahajan Cash Book of ______

10. DOUBLE COLUMNS CASH BOOK/CASH CASH BOOK WITH DISCOUNT AND CASH COLUMNS contd. Balancing: It should be noted that in the double column cash book, cash column is balanced like any other ledger account. But the discount column on each side is merely totalled. The total of the discount column on the debit side shows the total discount allowed to customers and is debited to Discount Allowed Account. The total of the discount column on the credit side shows total discount received and is credited to Discount Received Account. Samir K Mahajan

11. DOUBLE COLUMNS CASH BOOK/CASH BOOK WITH DISCOUNT AND CASH COLUMNS : Example Enter the following transactions in a Double column Cash Book 1980 Jan 1 : Cash in hand ------------- Rs. 11200 Jan.5 : Received from Akash ---- Rs. 290 Discount Allowed – Rs. 10 Jan 7 : paid rent --------------------- Rs. 30 Jan 8 : sold goods ------------------ Rs. 300 Jan10 : Paid Laxmi----------------- Rs.695 Discount Received ------- Rs. 5 Jan 27: Purchased furniture ------- Rs 200 Jan 31 : paid salaries ---------------------- Rs 100 Samir K Mahajan

12. Cash Book of ________ Dr Receipts PaymentsCr DateParticularR.N.R.N. L.F.L.F. AmountDateParticularV.N.V.N. L.F. L.F. Amount (Rs) Discount allowed (Rs) Cash (Rs) Discount Received (Rs) Cash (Rs) 1980 Jan 1 Jan.5 Jan. 8 Feb 1 To Balance b/d To Akash To Sales To Balance b/d 10 11 200 290 300 1980 Jan. 7 Jan. 10 Jan. 27 Jan. 31 Jan 31 By rents By Laxmi Furniture By Salaries By Balance c/d 5 30 695 200 100 10765 1011790 5 10765 Samir K Mahajan

13. TRIPLE COLUMN CASH BOOK Large business concerns receive and make payments in cash and by cheques. Where cash discount is a regular feature, a Triple Column Cash Book is more advantageous. This cash book has three amount columns (cash, bank and discount) on each side. All cash receipts, deposits into bank and discount allowed are recorded on debit side All cash payments, withdrawals from bank and discount received are recorded on credit side. Cash and bank columns are balanced Discount columns are merely totalled Samir K Mahajan

14. TRIPLE COLUMN CASH BOOK contd. Dr Receipts Triple Column Cash Book Payments Cr DateParticularR.N.L.F.Dis co un t All ow ed Cash (Rs.)Bank (Rs) DateParticula r V.N.L.F.Dis co un t Re cie ve d Cash (Rs.)Bank (Rs) Samir K Mahajan

15. Contra Transactions Contra transactions: Transactions which affect cash in hand (cash balance) and cash at bank (bank balance) simultaneously When cash is deposited in bank, it will decrease cash in hand and increase in cash at bank. Decrease in cash in hand will be shown by “by bank A/C ” in credit side and the amount will be shown in ‘cash column’ of credit side increase in ‘cash at bank’ will be shown by “to cash A/C or office A/C’ in debit side and the amount will be shown in ‘bank column’ of debit side Samir K Mahajan

16. Contra Transactions contd. When cash is deposited in bank Debit Side Double Column Cash BookCredit side DateParticularCash (Rs.)Bank (Rs)DateParticularCash (Rs.) Bank (Rs) 2014 Jan 31 To Cash A/CXXXX2014 Jan 31 By Bank A/CXXXX Samir K Mahajan

17. Contra Transactions contd. When cash is withdrawn from bank for business, it will decrease cash in bank and increase in cash at hand. Decrease in ‘cash at bank’ will be shown by “to Bank A/C ” in debit side and the amount will be shown in ‘cash column’ of debit side increase in ‘cash at hand ’ will be shown by “by cash A/C or office A/C’ in credit side and the amount will be shown in ‘bank column’ of credit side Samir K Mahajan

18. Contra Transactions contd. When cash is withdrawn from bank for business Debit Side Double Column Cash BookCredit side DateParticularCash (Rs.)Bank (Rs)DateParticularCash (Rs.) Bank (Rs) 2014 Jan 31 To Bank A/CXXXX2014 Jan 31 By Cash A/CXXXX Samir K Mahajan

19. TRIPLE COLUMN CASH BOOK: Example Enter the following transactions in a triple column Cash Book 1980 Jan 1 : Commences business with cash Rs 30000 Jan 3 : pays Rs 19000 in to bank current account Jan.4 : received cheque Rs 600 from Toshi Jan 7 : pays into bank Toshi’s cheque Rs 600 Jan 10 : pays Patel by cheque Rs.330 and allowed discount of Rs 20 Jan10 : Sima pays into his bank account Rs 475 Jan 12: receives cheque for Rs. 450 from Vora and allowed him discount Rs 10 Jan 14: receives cash for Rs 75 and cheque for Rs 100 for cash sales Jan 20 pays into bank Rs. 1000 Jan 23 : pays by cheque Rs 280 for cash purchases Jan30 : pays sundry expenses in cash for Rs 50 Jan 31 : draws a cheque Rs. 400 for office use Jan 31 : draws a cheque Rs. 275 for private use use Jan 31 : pays Anita Rs 375 in cash and is allowed discount Rs 25 Jan 31 : Pays rent Rs 200 and by cheque Jan 31 : purchases goods Rs 300 for cash Jan 31 : receives cheque for commission for Rs 500 from Manohar and pays the same into bank Samir K Mahajan

20. Cash Book Dr Receipts PaymentsCr DateParticularL.F.Amount (Rs) DateParticularL.F. Amount (Rs) Discou nt (Rs) Alowe d Cash (Rs) Bank (Rs) Discount (Rs) Recieved Cash (Rs) Bank (Rs) 1980 Jan 1 Jan 3 Jan 4 Jan 7 Jan 10 Jan 12 Jan 14 Jan 20 Jan 31 To capital A/C To Cash A/C To Toshi A/C To Cash A/C To Sima A/C To Vora A/C To Sales A/C To Cash A/C To Bank A/C To Commission A/C To Balance b/d (C) 10 30000 600 450 175 400 19000 600 475 1000 500 1980 Jan 3 Jan 7 Jan 10 Jan 20 Jan 23 Jan 30 Jan 31 By Bank A/C By Patel A/C By Bank A/C By Purchase A/C Sundry Expense A/C By Cash A/C By Drawing A/C By Anita A/C By Rent A/C By Purchase A/C By Balance c/d (C) 20 25 19000 600 1000 50 375 300 10300 330 280 400 275 200 20090 103162521575 453162521575 1030020090 Samir K Mahajan

21. Cash Book contd. Samir K Mahajan Example: prepare a cash book from the followings: 1980 Jan 1 : Cash balance Rs 20000 and bank balance 30000 Jan.4 : Received cheque Rs 600 from Rakhi Jan 7 : Deposit Rakhi’s cheque Rs 500 in bank Jan10 : Keya pays into business’ bank account Rs 475 Jan 23 : Rakhi’s cheque is dishonoured Jan 24: Recieves Rs 750 from Sunaina Jan 29 : Draws a cheque Rs. 800 for office use Jan 30 : Draws a cheque Rs. 700 for private use Jan 30: Took cash Rs. 600 per personal use Jan 31 : Receives cheque for Rs 500 from Manihara and pays the same into bank

22. Cash Book Dr Receipts PaymentsCr DateParticularL.F.Amount (Rs) DateParticularL.F.Amount (Rs) Cash (Rs) Bank (Rs) Cash (Rs) Bank (Rs) 1980 Jan 1 Jan 4 Jan 7 Jan 10 Jan 24 Jan 29 Jan 31 Feb 1 To balance b/d To Rakhi To Cash A/C To Keya To Sunaina Bank A/C Manihara To Balance b/d (C ) 20000 600 750 800 30000 600 475 500 1980 Jan 7 Jan 23 Jan 29 Jan 30 Jan 31 By Bank A/C By Rakhi Cash A/C Drawing A/C By Balance c/d (C) 600 800 700 Samir K Mahajan

23. PETTY CASH BOOK Petty means ‘small’. In every organisation, a large number of small payments such as conveyance, carriage, cartage, postage, telegrams and other expenses (collectively recorded under miscellaneous expenses) are made. These are generally repetitive in nature. If all these payments are handled by the cashier and are recorded in the main cash book, the procedure is found to be very cumbersome. The cashier may be overburdened and the cash book may become very bulky. To avoid this, large organisations normally appoint one more cashier (petty cashier) and maintain a separate cash book to record these transactions. Such a cash book maintained by petty cashier is called petty cash book. Samir K Mahajan

24. PETTY CASH BOOK cont. The petty cashier works on the Imprest system. Imprest means ‘money advanced on loan’. Under this system, a definite sum, say Rs. 2,000 is given to the petty cashier at the beginning of a certain period. This amount is called imprest amount. The petty cashier goes on making all small payments out of this imprest amount and when he has spent the substantial portion of the imprest amount say Rs.1,780, he gets reimbursement from the head cashier after submitting the petty cash book to the head cashier and satisfying the accounts with the vouchers. Thus, he again has the full imprest amount in the beginning of the next period. The reimbursement may be made on a weekly, fortnightly or monthly basis, depending on the frequency of small payments. (In certain cases, the petty cash system is operated through the main cash book itself. In such instances, the petty cash book is not maintained independently.) Samir K Mahajan

25. PETTY CASH BOOK contd. As in the case of any other cash book, petty cash book also has the debit side and the credit side. The debit side has very infrequent entries because cash receipt by the petty cashier is mainly from the cashier at the beginning or close of a specified period. The credit side has many columns. For each important petty expenses there is a seperate column, These analytical columns helps to know the actual amount spent on each and every type of petty expenses for the specified period. Petty Cash Book contd. Samir K Mahajan

26. PETTY CASH BOOK contd. Each petty payment is first entered in the total payments column, and then recorded in the respective analytical column, so that i.the total amount spent on each expenses for a particular period can be easily ascertained by adding up the respective column. ii. only the periodical total of each column is posted to the ledger. iii. the total petty payment for any period can be easily ascertained from the total payments column. The analytical petty cash book may be designed according to the requirements of the business. Petty Cash Book contd. Samir K Mahajan

27. DrPetty Cash Book Cr Amount Received C.B.F.NDateParticula rV. N. Amount Paid Analysis of Payment Rs. Postage and Telegraph Printin g and Statio nary CarriageOffice Expenses and Repairs Sundri es L.f. Petty Cash Book contd. Samir K Mahajan

28. Explanation of columns in the analytical petty cash book 1. Receipts: This is the first column of the petty cash book. Amount received by the petty cashier for meeting petty expenses and the opening balance of petty cash will be recorded in this column. 2. C.B.F.N: This refers to Cash Book Folio Number. In this column we write the page number of the cash book where cash paid by the cashier is recorded. 3. Date: In this column, the date of receipt / payment of cash is recorded. 4. Particulars: This column records the details of the receipts / payments. Cash received in the beginning is shown as ‘To cash’ and all the petty expenses are shown as ‘By expenses’ (name of the expense). 5. V.N.: The serial number of the voucher (cash payment) is written in this column. Petty Cash Book: Contd. Samir K Mahajan

29. 6. Total Payments: This column records the amount of every expense. At the end of the week or month expenses are totalled and afterwards balanced. The total expenses of the week or the month is compared with the total of the receipts column and the balance is obtained. 7. Postage and Telegrams: This column records postal expenses like post card, envelope, inland letter, postage stamps, registered letter, parcel, telegrams and telephone charges. 8. Printing & Stationery: It includes expenses incurred for purchasing materials such as paper, ink, pencil, eraser, carbon paper and other items of stationery. 9. Cartage / Freight / Carriage: In this column carriage inward of goods is recorded. It includes cartage paid to coolie, tempo charges etc. 10.Travelling Expenses / Conveyance: In this column fare for hiring auto rickshaw, bus, train, taxi etc., are recorded. Petty Cash Book: Contd. Samir K Mahajan

30. 11. Office Expenses & Repairs: Minor repairing charges and petty office expenses like cleaning are included in this column. 12.Sundry Expenses / Sundries: In addition to these important expenses, there may be certain expenses, which may not have specific columns for them. Expenses like refreshment, charity, tips, amount paid to scavengers etc., are recorded in this column. 13.L.F.:This refers to the page number of the ledger where the respective account is recorded. Petty Cash Book contd. Samir K Mahajan

31. Balancing Petty Cash Book At the end of the period i.e., week or month the total payments column and individual expenses columns are totalled. It should be ascertained that the total of petty expenses column must be equal to the total of payments column. The total payments column is compared with the total of receipts column and balance is obtained. The closing balances is shown as ‘By Balance c/d’. The closing balance is carried forward to the beginning of the next week or month. It is shown as ‘To Balance b/d’. Petty Cash Book contd. Samir K Mahajan

32. Posting of Entries in the Petty Cash Account The petty cash book is balanced periodically. The difference between the total receipts and total payments is the balance with the petty cashier. The balance is carried to the next period and the petty cashier is paid the amount actually spent. A petty cash account is opened in the ledger. It is debited with the amount given to petty cashier. Each expense account is individually debited with the periodic total as per the respective column by writing “petty cash account” and the petty cash account is credited with the total expenditure incurred during the period by writing sundries as per petty cash book. The petty cash account is balanced. It reflect the actual cash with the petty cashier. Petty Cash Book contd. Samir K Mahajan

33. Example: Mr Mohit, the petty cahier of M/s Samaira Traders received Rupees 2,000 on May 01, 2010 from the Head Cashier. For the month, details of petty expenses are listed here under: Petty Cash Book contd. Samir K Mahajan Date 2010 May DetailsAmount Rs. 02 03 04 05 06 08 10 12 13 14 16 19 20 22 23 28 29 30 Auto fare Courier services Postal stamps Erasers/Sharpeners/Pencils/Pads Speed post charges Taxi fare (Rs.105 + Rs.90) Refreshments Auto fare Registered postal charges Telegram Cartage Computer stationery Bus fare STD call charges Office sanitation including disinfectant (Rs. 36 + Rs. 24) Refreshment Photo stating charges Courier services Unloading charges Bus fare 55 40 105 225 98 195 85 60 42 34 25 165 24 87 60 45 47 40 15

34. Petty Cash Book Amount Received C.B. F.N DateParticularVNVN Amount Paid Analysis of Payment Rs.2010 May Rs.PostageTelephone and Telegram Conve yance Stationa ry Miscellan eous 200001Cash Received 02 03 04 05 06 08 10 12 13 14 16 19 Auto fare Courier services Postal stamps Erasers/Sharpeners/Pencils/Pads Speed post charges Taxi fare (Rs.105 + Rs.90) Refreshments Auto fare Registered postal charges Telegram Cartage Computer stationery Bus fare STD call charges 55 40 105 225 98 195 85 60 42 34 25 165 24 87 40 105 98 42 34 87 55 195 60 24 225 165 85 25 Petty Cash Book contd. Samir K Mahajan

35. AnalysisPetty Cash Book Amount Received C.B. F.N DateParticularVNVN Amou nt Paid Analysis of Payment Rs.2010 May Rs.PostageTelephone and Telegram Conve yance Stationa ry Miscellan eous 20 22 23 28 29 30 Office sanitation including disinfectant (Rs. 36 + Rs. 24) Refreshment Photo stating charges Courier services Unloading charges Bus fare 60 45 47 40 15 40 15 60 45 47 40 31Balance c/d 1487 513 325121364390302 2000 513 1487 June 01 Balance b/d Cash Received Petty Cash Book contd. Samir K Mahajan