Cash Book

The Cash book is a book of original entry in which transactions relating only to cash receipts and payments are recorded. When cash is received it is entered on the debit or left hand side. Similarly, when cash is paid out it is recorded on the credit or right hand side of the cash book.

  • Cash Book is dual purpose book; it is Journal as well as Ledger
  • Cash on hand, cash in banks, and petty cash are often combined and reported simply as Cash
  • Cash is the most liquid asset and is listed first in the current assets section of the balance sheet

It is journal as cash transactions are chronologically recorded in it. It is a ledger as it contains a classified record of all cash transactions. It Journalized Ledger. As for as cash is concerned, consists of coins, currency, checks, money orders, and money on hand or on deposit in a bank. Cash is reported in both the balance sheet and the statement of cash flows. The balance sheet shows the amount of cash available at a given point in time. The statement of cash flows shows the sources and uses of cash during a period of time. Many companies use the designation “Cash and cash equivalents” in reporting cash. Cash equivalents are short-term, highly liquid investments (Marketable Security) that are both:

  1. Readily convertible to known amounts of cash, and
  2. So near their maturity that their market value is relatively insensitive to changes in interest rates

A negative balance in the cash account should be rare. If so, it should be reported among current liabilities. This book enables us to know the balance of cash in hand and at bank at any point of time. Cash book consists of cash and bank accounts taken out of ledger and maintained separately. For Every entry made in the cash book there must be a proper voucher. Being the cash book with the balance brought forward from the preceding period or with what we start. It appears at the top of the left side as “Balance b/d” or “Capital b/d” in case of a new business. It should be balanced at the end of a given period.


>>> For theoretical purpose practice Cash Books MCQs 1.

Types of Cash Book

The type of cash book to be used by any business will depend upon its nature and requirements. It may be anyone of the following:

Types of cash book


>> Use Cash Book Format for practice purpose for all types of cash book.