Fog Accountancy Tutorial: Cash Book

Introduction

• Today's lecture focuses on the cash book in accounting.
• The cash book is a subsidiary book that records cash transactions.
• It follows the double-entry system with a debit and credit side.

Definition and Function

• Cash Book: A part of the ledger system, used to record only cash transactions.
• It is a subsidiary book despite following the double entry system.
• Transactions not involving cash are not recorded in the cash book.
• Analyzes cash inflows and outflows.

Types of Cash Books

1. Single Column Cash Book

   • Contains either a bank column or a cash column.
   • Used for transactions from cash in hand or cash at bank.
   • Separates cash transactions from bank transactions.

2. Double Column Cash Book

   • Includes both cash and bank columns on both debit and credit sides.
   • Used when transactions involve both cash and bank.

3. Three Column Cash Book

   • Adds a discount column to the cash and bank columns.
   • Records discounts received or allowed.
   • Debit and credit sides cater for cash, bank, and discount columns.

4. Petty Cash Book

   • Used for recording petty cash expenses.
   • Will be discussed separately in another session.

Detailed Explanation

• Single Column Cash Book: Functions like a T-account with a debit side for inflows and a credit side for outflows.

  • Cash inflows are debited, cash outflows are credited.
  • Focuses solely on cash transactions (either cash in hand or bank transactions).

• Double Column Cash Book: Focus for this session.

  • Includes two columns for both cash and bank on each side of the account.
  • Helps in examining situations where transactions involve both cash in hand and banking.

Practical Application

• Emphasis on understanding the double column cash book for practical examination.
• Future sessions will include problem-solving and deeper exploration of the three-column cash book.

Conclusion

• Summary of the types of cash books and their distinct purposes.
• The focus on the double column cash book will aid in practical understanding and application in accounting tasks.