good day welcome to another session of Fog Accountancy tutorials today we are going to look at the cash book we are going to look extensively into the cash book and so that is our topic for today the cash book now what is the cash book The cash book is a subsidiary book of accounts that is used to record cash transactions. Now, it can also be said to be part of the ledger system or the principal book system because it is the only subsidiary book of accounts that follows the double entry system. And so there is a debit side and a credit side for the cash book, just as it is for any other account. And so the cash book is seen like an account or a ledger because course it follows a double entry system however the cash book is a subsidiary book because transactions of cash are first recorded in them remember if you refer to my video on accounting books i spoke about the fact that the subsidiary books um there are some special journals and there is a general journal the cash book is a special journal it records only cash transactions so if there is any transaction that is not by cash it does not appear in the cash book all that we need is cash transactions and the analysis that we are going to do is with cash inflows and cash outflows so that is all about the casual so I want to also repeat again that we are going to talk about three different main levels of the cash book or the main cash book has the single column cash book And then we have the double column cash book, which is also called the two column cash book. And then we have the three column cash book, which is the triple column cash book.
Now, these are the three levels of the main cash book. There is also a cash book called the petty cash book. which is also used to record petty cash expenses in the business okay so these are the levels of the cash now the single column cash book is a cash book that has only one column for amounts It means that when we say the cash book is a single column, it has either the bank column or the cash column. It cannot have both at the same time. Remember that transactions could either be made from cash in hand or could be made from cash.
Cash at Bank. Transactions that are being made from cash in hand are called Cash Transactions. And the ones that are being made from Cash at Bank is called Bank Transactions.
And so when we are preparing the Cash Book, we do our best to separate Cash Transactions from Bank Transactions. And that is what we mean by single column or double column. Now, the double column Cash Book is a Cash Book that has columns for both Cash and Bank.
And so we are going to create for the double side two columns. cash column and bank column. And for the credit side, we are going to create the cash column and the bank column as well. That is a double column. But the single column can have only one column.
It's either the bank column or the cash column. We cannot have both in the single column. And so, when you are preparing a single column cash book, you are using that cash book for either bank transactions solely or you are using that for both cash and bank transactions.
That is what we mean by the single column. It's just about the amount. columns and when we come to the three column cash book the three column cash book will have the same cash and bank columns for both debit and credit but with an additional column for discounts and so we take into consideration the fact that discounts could be received or allowed in our dealings with our customers and with other people and so what we are trying to say is that when we are paying an amount and there is a discount we should show the discount in the discount column when we are receiving amount and there is a discount we should show and so the three column cars book will have still a debit on a credit side but the debit side will cater for cash column bank column and a discount column and the credit side will also do same discount column cash column and a bank column so that is why there are differences where we have the single column cash book we have the double column cash book and then we have the three column cash book the petty cash book is a little different and so And so I'm going to treat that separately in a different video.
And that is what we are going to do. For now, let us focus on the main cash book. The single column, the double column, and the three columns.
column cash book okay so i'm going to try and take them one by one and try and explain how they will look like and then after that we'll try and pick a question and so okay so i begin with a single column cash book so the single column cash book now the single column cash book like i said has a column for either cash or bank and so it looks like the ordinary cash account or the bank account so even though i'm calling it a cash book is just like a normal T account, which has a debit side and a credit side. Now, what I want you to understand is that the debit side of the cash book is for all cash inflows, and the credit side is for cash outflows. So when cash is coming into the business...
we debit the cash book when cash is going out with credit and our focus is on only cash because this is a real account so when it is a cash column it means that everything that is coming in here is when there are cash in hand transactions so if it is the bank column then it means that the focus is on bank transactions and so influence from the bank transactions when someone is paying us by check we receive by check with debit and then we will pay out by check with credit because those are bank transactions so for now what I want us to do is to focus on the double column cash book for the single column cash book is hardly examined and so we are going to focus on the double column cash book for now and after that we will take a question and try and solve on the double column cash book and when we have understood the double column cash book we will move on to the three column cash book as well So let us focus on the double column card.