Cash book Introduction

1. All cash transactions are primarily recorded in it as soon as they take place; so it is a journal (a book of original entry). On the other hand, the cash aspect of all-cash transactions is finally recorded in the Cash Book (no posting in Ledger); so a Cash Book is also a Ledger (a book of final entry).
2. Only one aspect of the transaction is recorded.
3. It has two identical sides-left hand side, the debit side and right-hand side, the credit side.
4. All the items of cash receipts are recorded on the left-hand side and all items of cash payments on the right-hand side in order of date.
5. The difference between the total of two sides shows cash in hand.
6. It always shows a debit balance. It can never show a credit balance.

The Columns of the Cash Book are Explained Below:

1. Date:

The date of the transaction is written in this column in two lines—in the first line, the year and in the second line, the name of the month followed by the actual date.

2. Particulars:

In this column, the name of the opposite account is written (the second aspect of cash transaction). Below this is written the narration of the transaction.

3. L.F. (Ledger Folio):

The page number of the Ledger where the concerned (opposite ) account has been opened, is written in this column. This will help to locate the account from the Ledger. It may be noted that in a Ledger account J.F. is written as a reference, while in a Cash Book L.F. is written. It is so because cash transactions are not recorded in any Journal.

4. Amount:

The amount of the transaction is recorded in this column. The amount of cash received is recorded on the debit side in the amount column and the amount of cash paid is recorded on the credit side in the amount column.

5. V. NO. (Voucher Number):

The voucher number of each item of receipt and payment is also written. A voucher is necessary for each item of receipt and payment. Generally, a voucher has a serial number and this number is written in this column (V. No).

When cash is received from a debtor or customer, generally a receipt or ‘cash memo’ is issued to the debtor which is called Receipt Voucher. Again, when money is paid to a creditor or supplier a receipt is obtained from him which is called ‘Payment Voucher, Cash transactions are recorded in the Cash Book on the basis of Receipt Voucher and Payment Voucher.