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On the debit side of the account, cash receipts are written while on the credit side, cash disbursements are entered. As cash is an asset, so it is a debit account, i.e. a debit entry will increase the cash account whereas credit entry will decrease the same. It has just one column each for debit and credit for writing down all the cash transactions. On the debit side, a firm can record any cash that it has at the beginning of the month or any income it receives.

It is also much faster to access cash information in a cash book than by following the cash through a ledger. A cash book is a separate ledger in which all cash receipt and payment transactions are recorded. It is a company’s major storehouse of cash-related information. The data in the cash book is pooled and posted to the general ledger on a regular basis.

Key Differences Between Cash book and Passbook

The closing balance of the cash book will always be debit, that is a positive balance. Cash is a part of the current asset, and thus its closing balance will always be debit. There might be a credit balance of the bank column, indicating bank overdraft or excess withdrawn over deposits. The officials entrusted with preparing cash books are seated in a separate room, and the entrance of unauthorized employees is restricted there. Among the financial transactions of concern, cash transactions carry much more importance. If you are a business and you want to start using a bank cash book, you will need to speak with your bank.

Generally, cash books consist of two types – a general cash book and a petty cash book. But, there are three other types that companies use more often to handle cash dealings. There Cash Book Definition are primarily three types of cash books i.e. single column, double column, and triple column. But if you include petty cash books too, there are four types of cash books.

Is the Cash Book Journal or Ledger?

The cash books are opened in order to record all the transactions of money received and paid by a business concern on daily basis. Cash statements list all debits and credits for a specific period, such as a month or year. Both cash receipts and cash payments are recorded in a cash book. The cash book is also regularly reconciled with the bank statements as an internal auditing measure. Since all cash transactions are recorded in this book in the ledger account format, a separate cash account in the ledger is not needed.

It has debits and credits, which are double-entry bookkeeping entries. On the other hand, credits show decreases in value or liability accounts. Cash books record all transactions for cash, checks, money orders, or postal orders. Bank statements are lists of entries for each account holder that has been made in their personal accounts.

Meaning of Cash Book

The amount of the transaction is recorded in the final column. Separate columns are used for each expense in ‘Analytical petty cash book’. These are expenses which are incurred day after day; usually, petty expenses are large in quantity but insignificant in value. To record such expenses, a different book known as a petty cash book is maintained.

• This column is used for expenses that are insignificant and do not fall under any other columns of commonly occurring expenses in the analytical petty cash book.
• Thus maintaining cash book helps in effective cash management; moreover, it saves time and effort in preparing separate cash accounts.
• The double-column cash book system has been introduced to avoid complexity in posting bank transactions in the single column cash book.
• For example, if money has been received, the description might be  “Received in cash from client for a service.” The amount is the amount of the transaction.
• A cash book is a separate ledger in which all cash receipt and payment transactions are recorded.
• This type of cash book makes a record of all the receipts and payment of cash — coins, notes, cheques, bank drafts, postal orders etc.

In business, the transaction may occur in two ways, i.e. cash or credit. For recording cash transaction, there are separate books or accounts are maintained by the business entities, which are cash book and cash account. Cash Book is a subsidiary book, which records all the cash related transactions, i.e. receipts or payments. In the same way, Cash Account is an account in which cash receipts and disbursements are entered. These two differ in the fact that cash book is a subsidiary book, while cash account is a ledger account. (iii) Triple Column Cash Book- Triple Column Cash Book has three amount columns, one for cash, one for Bank and one for discount , on each side.