What is cash book and bank book
Difference Between Cash book and Passbook (with Comparison Chart) - Key DifferencesThere are end number of transactions occur in the normal course of business, where in receipt or payment is made in cash or cheque. To record these transactions the entity uses cash book and contains all the details of the receipts and disbursements that are recorded chronologically. Many times cash book is juxtaposed with Passbook, but there is a slight difference in the two. With the help of pass book, banks inform their customer about the status of their account. There are a few differences between cash book and pass book which are discussed in this article in detail, have a look. Basis for Comparison Cash book Passbook Meaning A book that keeps a record of cash transactions is known as cash book. A book issued by the bank to the account holder that records the deposits and withdrawals is known as passbook.
What is a Cash Book? Types of Cash Book.
Definition : A cash book is that unique book of accounts which fulfils the objective of both, a journal and a ledger. Like a journal, it is the first book which records all the cash transactions of the business. It also acts as a subsidiary book to post all the cash transactions, similar to a cash account in the ledger. It can be broken down into two words, i. Cash is a real monetary instrument like currency, i. Book refers to a compiled record of the information available in the written or printed form. Thus, we can say that cash book is the record of all the business transactions in the form of notes or coins, taken place in a particular period.
Cash book is the books of original entry which records the cash receipts and cash payments incurred during a particular period. All receipts and payments whether is received through Cheque, Cash, Bank Transfer, Postal order, Bank overdraft are recorded in the cash book. Though cash book is considering as an original book of entry, it is also considered as an integral part of the ledger. Cash book is the book which serves the purposes of both journal and ledger. The details of every transaction are described in the cash book. Point to be noted that the balance of the cash balance always be a debit balance because a person can not pay more than he had. As cash book is another kind of ledger, it has double entry in the cash book.
The differences are explained here: • The title of debit and credit columns has been changed to receipt and payment respectively. It is not necessary to make this.
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(1) Two Column Cash Book – Definition and Format:
Cash book is used to record all cash transactions. Cash transactions not only involve receipt and payment of cash and cheques but also include cash discounts allowed and received. - Financial Accounting Mgt
The double column cash book also known as two column cash book has two money columns on both debit and credit sides — one to record cash transactions and one to record bank transactions. In other words, we can say that if we add a bank column to both sides of a single column cash book , it would become a double column cash book. The cash column is used to record all cash transactions and works as a cash account whereas bank column is used to record all receipts and payments made by checks and works as a bank account. Both the columns are totaled and balanced like a traditional T-account at the end of an appropriate period which is usually one month. Since a double column cash book provides cash as well as bank balance at the end of a period, some organizations prefer to maintain a double column cash book rather than maintaining two separate ledger accounts for recording cash and bank transactions.
Cash Book: All cash transactions are entered in the cash book straightway, and ledger accounts are prepared on the basis of such records. Hence, Cash Book is considered as a Subsidiary book. Cash book is again a ledger and a principal book since, it serves as cash account and book account, the balances of which are recorded in the traial balance directly. Cash book has debit and credit sides. All receipts are entered on the debit side and all payments are enetered on the credit side. It is maintained under the Double entry principle.