Page 105 - DCOM101_FINANCIAL_ACCOUNTING_I

Unit 9: Cash Book

such items are to be recorded on the credit side of the Cash Book, i.e., amount received or paid in Notes
the Amount/Cash column and discount allowed/received in the discount column.
Trade discount is the discount allowed by the firm to encourage the regular customers to

buy more and more. This type of discount is allowed by the firm only on the total value

of the invoice. The discount is granted on the gross value of the goods purchased by the
regular customer from the enterprise.
Why is discount received brought under the credit side?
The reason for showing the discount received under the credit side of the cash book is
that the amount of discount received is availed only during the moment of payment of
overdues only due to credit purchase.

Note Multi-columnar Cash Book

The regular receipts and payments on various heads require the firm to design not only
a most suited cash book which is in a position to incorporate all the entries in nature of
cash, but also to reduce the excessive labour involved in the process of sorting them out.
To replace the bottlenecks of the three columnar cash book, multi columnar cash book is
developed, which is in a position to highlight the receipts and payments of a fi rm under
various accounting heads within a specifi ed period. Under this system of cash book, the
firm is required to register the payments and receipts of the respective heads only in the

columns especially provided for determining the balance under each head at the end of
the specifi ed month.

9.4 Petty Cash Book

It is a book maintained by the petty cashier who is especially appointed for the purpose of
assisting the cashier of the business enterprise in order to meet the day to day expenses that are
meager in volume. The cashier normally hands over a certain sum of money to the petty cashier
to meet tiny expenses of the enterprise based on the early estimation on the daily requirement
e.g. postage, refreshment charges. The meagre amount that is given by the cashier is known in

other words as petty cash or float. The vouchers and receipts are finally examined by the cashier
based on the presentation of petty cash book balance.
The given below is the proforma of petty cash book:

Analytical Petty Cash Book
Receipts Date Particulars Voucher Total Printing & Cartage Postage
(`) No. Amount (`) Stationery

Illustration 1: Prepare a cash book from the following:
2006 `
June 1 Cash in hand 7,850
June 2 Cash Purchases 2300
June 3 Cash Sales 6,250
June 4 Wages paid in cash 25

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