Page 104 - DMGT104_FINANCIAL_ACCOUNTING

Financial Accounting

Notes entries and are recorded in both sides of Triple Column Cash Book. The balance of cash column
is the closing cash in hand; the balance of bank column is the cash at bank or bank overdraft. The
discount column is not balanced but only totaled.
Following is the form of Three Columns Cash Book:
Three Columns Cash Book
Dr. Cr.
Date Particulars L.F. Discount Cash Bank Date Particulars L.F. Discount Cash Bank
( ) ( ) ( ) ( ) ( ) ( )

Important points to be noted while recording the transactions:
 When opening cash and bank balances are given, record on the debit side of cash and bank
columns
 When opening bank balance is given as overdraft, it should be recorded on the credit side
in the bank column

 When cash is received, it should be recorded on the debit side cash column, in the same
way cash payments made by the firm shown in the cash column on credit side.
 When cash or Cheque is received from debtors through cash sales or any other sources, it
is recorded in the cash column on debit side, if the Cheque is deposited into bank on the
same day or assumed to be deposited on the same day, it is recorded in the bank column
on the debit side.
 If any payment is made or debt is cleared in the form of Cheques, it is recorded in the bank
column on the credit side.
 If the firm allows discount, it is recorded in the discount column on the debit side.
 If the discount is received, it is recorded on the discount column on the credit side.

 If the Cheques sent to bank for collection are dishonored, these should be recorded in the
bank column on the credit side. Similarly, if we receive any information that the Cheques
issued by us are dishonored, it should be promptly noted in the bank column on the debit
side.
 If cash is withdrawn from the bank for the business use, it should be recorded in the cash
column on debit side and bank column on the credit side.
 If we deposit cash into bank it should be recorded in the bank column on debit side and
credit side in the cash column. This type of transaction is called as contra entry. Where
both the sides are affected. To indicate that is a contra entry, the alphabet ‘C’ is mentioned
in the Ledger folio column on the both sides.

Contra entries will appear in the following occasions:
 When an account is opened with a bank
 The firm’s cash is deposited in the bank

 The cash is withdrawn from bank for office use
 The Cheques received from debtors, are deposited in the bank.
Moreover, if the company has opened two bank accounts i.e., one bank account in State bank of
Patiala and another bank account in Panjab National Bank then withdrawal from one bank and
deposit the same to another bank will also be shown through contra entry.

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