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Unit 9: Cash Book




          9.5 Summary                                                                           Notes

          z    The cash transactions are recorded in the subsidiary book known as the cash book. The
               cash book can be classified into four categories:

               ™    Single columnar cash book,
               ™    Double columnar cash book,

               ™    Three columnar cash book, and
               ™    Petty cash book.

          9.6 Keywords

          Cash Discount: It is given for prompt payment, hence, it is recorded in the Cash Book.
          Contra Entries: Transactions that relate to both cash and bank and is entered on cash column
          of one side and bank column of other side of Bank Column Cash Book. Recording of such
          transactions is known as ‘Contra entries’.
          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.

          Simple Cash Book: A Simple Cash Book records only cash receipts and cash payments. It has two
          sides, namely debit and credit.
          Trade Discount: It is given for increasing the volume of sales and it is adjusted in the invoice,
          hence no entry is passed in the books of the business, as it is always deducted from the catalogue
          price. It is usually allowed by a whole seller to a retailer.

          9.7 Self Assessment

          State whether the following statements are true or false:

          1.   Petty Cash Book is handled by the Head Cashier.
          2.   Petty Cash Book is maintained by a person known as Petty Cashier.
          3.   The Cash Book records all cash payments only.
          4.   The Cash Book records all cash payments and all receipts only.

          5.   Cash discount is the discount allowed by the firm to encourage the regular customers to

               buy more and more.
          6.   The receipts and payments are recorded in the debit and credit side of the cash book
               respectively.
          7.   The contra entries are posted in two different occasions viz cash withdrawal and cash
               deposit.

          Choose the appropriate answers:
          8.   The balance of cash account is generally ……………….
               (a)  credit
               (b)  debit
               (c)   None of these





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