Cash book is also called as cash journal or cash day book.  Basic Documents for the cash book are cash payment vouchers, cash receipt vouchers and contra vouchers. Therefore, first of all, the cash vouchers are prepared for all the transactions relating to cash then these vouchers are recorded in cash book.

Cash book is divided in two parts i.e. receipt side and payment side.  Receipt side is called as debit side of cash account and the payment side is called the credit side of cash account.  Both debit and credit sides have the columns like date, particulars, ledger folio and amount. In date column the date of voucher is written, in particulars the account head other than cash account is written, ledger folio is used when the entry is posted to ledger and in amount column the amount of voucher is written.

All cash payment vouchers are recorded in payment side and all cash receipt vouchers are recorded in receipt side. Contra vouchers relating to cash are also recorded in cash book. If the cash is withdrawn from bank then the voucher is written in receipt side of cash book if the cash is being deposited into bank the contra voucher is recorded in payment side of the cash book.

Keeping in view the size of cash transactions, some time, two separate cash books can be maintained to record receipt and payment vouchers. The cash book is maintained by the cashier or accountant. The balancing of cash book must be done on daily basis. Balancing means all receipt minus all payments. The balance figure shows the actual cash balance lying with cashier. It should be noted that the physical cash must tally as per the balance of cash book. The pages of cash book are always serially numbered.

A point is to be noted here that cash book can never show the credit balance. Credit balance means that the payments are more than receipts. How it is possible? How a cashier can pay without having the cash?  Balance of cash in cash book may be either in debit or nil.

Illustration:

Enter the following Transactions in the cash book of M/s XYZ Limited:-

Date Particulars Amount(In Rs.)
01.04.12 Opening balance of cash

12000/=

01.04.12 Cash received from Mr. X against the advance taken by him

3000/=

01.04.12 Rent paid to Mr. A for the month of April’2012

2000/=

02.04.12 Cash withdrawn from Syndicate Bank vide Cheque Number 045877

15000/=

02.04.12 Cash paid to Mr. X for bus pass for the month of April’2012

1500/=

02.04.12 Cash paid to M/s Prince Enterprises against their dues

2500/=

02.04.12 Office chairs purchased from M/s A-one Furniture House as per their cash memo number 121 dated 03.04.12

14000/=

03.04.12 Stationery purchased from M/s Perfect Stationers as per their Cash Memo No. 1581 dated 03.04.12

1000/=

03.04.12 Cash received from M/s Mascot Marketing against our dues

7000/=

03.04.12 Cash deposited in to Syndicate Bank

7000/=

Solution:

following shall be the entries for above transactions :-

Cash Payment Voucher

Date: 01.04.12

Rent Account Dr.  Rs.2000/=

To Cash Account  Rs.2000/=

(Being cash paid to Mr. A as rent for the month of April’2012)

Cash Receipt Voucher

Date: 01.04.12

Cash Account Dr. Rs.3000/=

To Staff Advance Account Rs.3000/=

(Being Cash received from Mr. X against the advance given to him)

Note: No entry shall be prepared for opening balance of cash. It will simply be shown in debit side of cash book.

Cash Payment Voucher

Date:02.04.12

Conveyance Expenses Account Dr. Rs.1500/=

To Cash Account Rs.1500/=

(Being Cash paid to Mr. X for bus pass for the month of april’2012)

Cash Payment Voucher

Date: 02.04.12

M/s Prince Enterprises Dr. Rs. 2500/=

To Cash Account Rs. 2500/=

(Being Cash paid to M/s Prince Enterprises  against their dues)

Cash Payment Voucher

Date: 02.04.12

Furniture Account Dr. Rs. 14000/=

To Cash Account Rs. 14000/=

(being office chars purchased from M/s A-One Furniture as per their Cash Memo No. 121 dated 02.04.12 enclosed)

Contra Voucher

Date: 02.04.12

Cash Account Dr. Rs. 15000/=

To Syndicate Bank Account Rs.15000/=

(Being cash withdrawn from Syndicate Bank vide Cheque Number 045877  for official use)

Cash Payment Voucher

Date: 03.04.12

Printing and Stationery Expenses Account Dr. Rs. 1000/=

To Cash Account Rs.1000/=

(Being stationery items purchased from M/s Perfect Stationers as per their Cash Memo No. 1581 Dated 03.04.12 enclosed)

Contra Voucher

Date: 03.04.12

Syndicate Bank Account Dr. Rs. 7000/=

To Cash Account Rs.7000/=

(Being Cash deposited in to Syndicate Bank)

 Cash Receipt Voucher

Date: 03.04.12

Cash Account Dr. Rs.7000/=

To M/s Mascot Marketing Rs.7000/=

(Being Cash received from M/s Mascot Marketing on account)

Note: All payment Vouchers shall be written in payment side of cash book and receipt vouchers  shall be written in receipt side of cash book. Regarding contra vouchers, if it relates to cash deposit in bank then it will be entered in payment side of cash book and if it relates to cash withdrawal from bank then it will be entered in receipt side of cash book.

The above vouchers shall be entered in cash book as follows:-

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