Cash Book

1) Specimen of simple cash book

Simple cash book  

2)  Two column cash book:

Two column cash book represents two accounts at a time. Two column cash book can be presented in any of the following three form.

1) With cash and discount column.

2) With bank and discount column.

3) With cash and bank column.

3) Three column cash book:

Three column cash book has three columns – Discount, cash and bank simultaneously, on debit and credit sides.

Contra entries:

The transactions which are related to the cash A/c and Bank A/c, their dual effect is recorded completely use in the three column cash book. These entries are called as contra entries.

Petty cash book

Meaning of petty cash book: 

A petty cash book is one in which all petty or small payments made through petty cash fund are recorded =systematically petty cash book is maintained by the petty cashier. Petty cash book can be maintained either in simple or in analytical way.

Imprest system of petty cash book:-

 It is convenient to entrust a definite sum of money to the petty – cashier in the beginning of a period and to reimburse him for payments made at the end of the period. Thus he will have again the fixed amount in the beginning of new period. Such a system is known as imprest system.

This  system is very useful specially of (v) an analytical petty cash book is used. The book has one column to record receipt of cash (which is only from the main cashies) and other columns to record payments of various types. The total of the various columns show why payments have been made and then the relevant accounts can be debited.

 Essentials of good imprest system:

i) The amount fixed for petty cash should be sufficient for the likely small payments for a relatively short period, say for a week or a fortnight (a period of two weeks).

(ii) The reimbursement should be made only when petty coshier prepares a statement showing total payments supported by vouchers ie documentary evidence and should be limited to the amount of actual disbursements.

(iii) The vouchers should be filed in order.

 (iv)  The petty cashier should not be allowed to receive any cash except for reimbursement.

 (v) No payment should be made without authorization.

Methods of preparing petty cash book

 Petty cash book is prepared by two methods:

1) Simple petty cash book

2) Analytical petty cash book.

1.Simple petty cash book has two parts. But a single column is maintained fro particular

            Speciment of simple petty cash book

 2.   Analytical petty cash book:

 This form of petty cash book is mostly used. In this method the expenses of business are grouped to record their  respected payments. These groups are based on the natures of business. Every business has some special expenses e.g. postage telegram, printing etc.

Specimen of petty cash book (Analytical)

Advantages of petty cash book.

1) Simple method.

2) Saving of time and labour

3)  Less chances of mistakes and omission.

4) Easy for posting

5) Less chances of theft and fronds.

6) Proof in the court.

7) Comparison of petty cash expenses.

 Explanation:-

(1) Simple method:

A fixed amount is received by the petty cashier at the beginning of the month. The petty cashier spends if and maintain its account.

2) Saving of time and labour:-

 Small expenses are recorded in petty cash book. Hence it saves both the time and labour of the head cashier.

3)  Less chances of mistakes and omission:-

 When a particular task is assigned to the petty cashier, than it has an advantage that there are less chances of mistakes and omissions.

4)  Easy for posting:-

If all the petty expenses would have been recorded in the main cash book of the business, then it is very time consuming, But making use of petty cash book we group all the expenses into four or five heads and only four or five accounts are opened in the leader and postings under these heads are made once in a month.

5) Less chances of theft and fraud:-

Due to petty cash book, the cash requirement of business can be limited and it also requires vouchers which reduces the chances of thefts and frauds.

6) Proof in the court:-

  It can be presented as a proof in the court.

7) Comparisons of petty cash expenses:-

 We can compare petty cash expenses of different periods with the help of petty cash book.