Question

Definition of Cash book

Answer 1

Cash book: This book is used for recording all transactions relating to cash receipts and cash payments.

Answer 2

Answer:

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.

Explanation:

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:

• A single column cash book to record only cash transactions.

• A double/two column cash book to record cash as well as bank transactions.

• A triple/three column cash book to record cash, bank and purchase discount and sales discount.

• A petty cash book to record small day to day cash expenditures.