Cash Book Tutorial
Learn about different types of Cash Books used in accounting
1. Simple Cash Book
A Simple Cash Book records all cash receipts on the debit side and all cash payments on the credit side. It is used when all transactions are made in cash only.
Example:
The following transactions occurred in the business of Mr. Sharma during January 2025:
| Simple Cash Book - January 2025 | ||||||
|---|---|---|---|---|---|---|
| Date | Particulars | Debit (₹) | Date | Particulars | Credit (₹) | |
| Jan 1 | Balance b/d | 50,000 | Jan 8 | Rent Paid | 8,000 | |
| Jan 5 | Cash Sales | 15,000 | Jan 12 | Salary Paid | 12,000 | |
| Jan 18 | Cash Received from Debtor | 20,000 | Jan 25 | Electricity Bill Paid | 3,500 | |
| Jan 31 | Balance c/d | 61,500 | ||||
| Total | 85,000 | Total | 85,000 | |||
Practice Questions:
Question 1:
Prepare a Simple Cash Book from the following transactions for February 2025:
- Feb 1: Cash in hand ₹40,000
- Feb 5: Cash sales ₹25,000
- Feb 10: Paid wages ₹8,000
- Feb 15: Received from debtor ₹15,000
- Feb 20: Paid for stationery ₹2,500
- Feb 28: Paid insurance premium ₹5,000
| Simple Cash Book - February 2025 | |||||
|---|---|---|---|---|---|
| Date | Particulars | Debit (₹) | Date | Particulars | Credit (₹) |
| Feb 1 | Balance b/d | 40,000 | Feb 10 | Wages Paid | 8,000 |
| Feb 5 | Cash Sales | 25,000 | Feb 20 | Stationery Paid | 2,500 |
| Feb 15 | Received from Debtor | 15,000 | Feb 28 | Insurance Premium Paid | 5,000 |
| Feb 28 | Balance c/d | 64,500 | |||
| Total | 80,000 | Total | 80,000 | ||
Answer: Closing Balance = ₹64,500
Question 2:
From the Simple Cash Book, if the opening balance is ₹30,000, total receipts are ₹55,000, and total payments are ₹48,000, what is the closing balance?
Solution:
Opening Balance = ₹30,000
Add: Total Receipts = ₹55,000
Total Debit Side = ₹30,000 + ₹55,000 = ₹85,000
Less: Total Payments = ₹48,000
Closing Balance = ₹85,000 - ₹48,000 = ₹37,000
The closing balance represents cash in hand at the end of the period.
Question 3:
Identify which side (Debit or Credit) the following transactions will be recorded in a Simple Cash Book:
- a) Cash withdrawn from bank ₹10,000
- b) Purchase of goods for cash ₹7,500
- c) Commission received ₹3,000
- d) Salary paid ₹15,000
Solution:
| Transaction | Side | Reason |
|---|---|---|
| a) Cash withdrawn from bank ₹10,000 | Debit | Cash received (increases cash) |
| b) Purchase of goods for cash ₹7,500 | Credit | Cash paid (decreases cash) |
| c) Commission received ₹3,000 | Debit | Cash received (increases cash) |
| d) Salary paid ₹15,000 | Credit | Cash paid (decreases cash) |
Remember: Debit side = Cash IN, Credit side = Cash OUT
2. Cash Book with Cash and Bank Column
This type of Cash Book has two columns on each side - one for cash transactions and one for bank transactions. It records both cash and bank transactions simultaneously.
Example:
The following transactions occurred in the business of Ms. Priya during March 2025:
| Cash Book with Cash and Bank Column | |||||||
|---|---|---|---|---|---|---|---|
| Date | Particulars | Cash (₹) | Bank (₹) | Date | Particulars | Cash (₹) | Bank (₹) |
| Mar 1 | Balance b/d | 25,000 | 75,000 | ||||
| Mar 3 | Rent Paid (by cheque) | 10,000 | |||||
| Mar 5 | Cash Sales | 18,000 | Mar 7 | Wages Paid (cash) | 6,000 | ||
| Mar 10 | Cash deposited into bank | 15,000 | Mar 10 | Cash deposited into bank | 15,000 | ||
| Mar 15 | Cheque received | 30,000 | Mar 18 | Paid to Creditor (cheque) | 20,000 | ||
| Mar 20 | Cash withdrawn from bank | 10,000 | Mar 20 | Cash withdrawn from bank | 10,000 | ||
| Mar 25 | Commission received | 5,000 | Mar 28 | Electricity (cash) | 2,500 | ||
| Total | 58,000 | 1,20,000 | Total | 23,500 | 40,000 | ||
| Balance c/d | Mar 31 | Balance c/d | 34,500 | 80,000 | |||
| Grand Total | 58,000 | 1,20,000 | Grand Total | 58,000 | 1,20,000 | ||
Practice Questions:
Question 1:
Prepare a Cash Book with Cash and Bank columns from the following transactions for April 2025:
- April 1: Cash in hand ₹20,000; Cash at bank ₹60,000
- April 5: Cash sales ₹15,000
- April 8: Deposited cash into bank ₹10,000
- April 12: Paid rent by cheque ₹8,000
- April 18: Withdrew from bank ₹5,000
- April 25: Received cheque from debtor ₹12,000
| Cash Book - April 2025 | |||||||
|---|---|---|---|---|---|---|---|
| Date | Particulars | Cash (₹) | Bank (₹) | Date | Particulars | Cash (₹) | Bank (₹) |
| Apr 1 | Balance b/d | 20,000 | 60,000 | Apr 8 | Cash deposited | 10,000 | |
| Apr 5 | Cash Sales | 15,000 | Apr 12 | Rent Paid | 8,000 | ||
| Apr 8 | Cash deposited | 10,000 | Apr 18 | Cash withdrawn | 5,000 | ||
| Apr 18 | Cash withdrawn | 5,000 | |||||
| Apr 25 | Cheque received | 12,000 | |||||
| Total | 40,000 | 82,000 | Total | 10,000 | 13,000 | ||
| Apr 30 | Balance c/d | 30,000 | 69,000 | ||||
| Grand Total | 40,000 | 82,000 | Grand Total | 40,000 | 82,000 | ||
Answer: Closing Cash = ₹30,000, Closing Bank = ₹69,000
Question 2:
When ₹8,000 cash is deposited into the bank, how should this be recorded in a double-column cash book?
Solution:
When cash is deposited into bank, it is recorded TWICE in the cash book:
- Debit Side - Bank Column: ₹8,000 (Bank balance increases)
- Credit Side - Cash Column: ₹8,000 (Cash balance decreases)
This is called a Contra Entry and is marked with 'C' in the folio column. It appears on both sides of the cash book but doesn't affect the overall total as it's an internal transfer.
Question 3:
Opening balances: Cash ₹15,000, Bank ₹45,000. During the month: Cash received ₹20,000, Bank receipts ₹35,000, Cash payments ₹18,000, Bank payments ₹25,000. Calculate the closing balances.
Solution:
Cash Balance:
Opening Balance = ₹15,000
Add: Cash Received = ₹20,000
Total = ₹35,000
Less: Cash Payments = ₹18,000
Closing Cash Balance = ₹17,000
Bank Balance:
Opening Balance = ₹45,000
Add: Bank Receipts = ₹35,000
Total = ₹80,000
Less: Bank Payments = ₹25,000
Closing Bank Balance = ₹55,000
Final Answer: Cash = ₹17,000, Bank = ₹55,000
3. Petty Cash Book
A Petty Cash Book is used to record small day-to-day expenses such as stationery, tea, postage, etc. It follows the Imprest System where a fixed amount is given to the petty cashier at the beginning of the period.
Example:
Mr. Kumar maintains a Petty Cash Book on the imprest system with an imprest amount of ₹5,000. Following are the petty expenses for the week:
| Petty Cash Book | |||||||
|---|---|---|---|---|---|---|---|
| Date | Particulars | Receipts (₹) | Total (₹) | Stationery (₹) | Conveyance (₹) | Postage (₹) | Miscellaneous (₹) |
| May 1 | Cash received (Imprest) | 5,000 | |||||
| May 2 | Stationery purchased | 350 | 350 | ||||
| May 3 | Taxi fare | 200 | 200 | ||||
| May 4 | Postage stamps | 150 | 150 | ||||
| May 5 | Tea and snacks | 180 | 180 | ||||
| May 6 | Courier charges | 120 | 120 | ||||
| May 7 | Bus fare | 100 | 100 | ||||
| Total Payments | 1,100 | 350 | 300 | 270 | 180 | ||
| May 7 | Balance c/d | 3,900 | |||||
| Total | 5,000 | 5,000 | |||||
| May 8 | Balance b/d | 3,900 | |||||
| May 8 | Cash received (Reimbursement) | 1,100 | |||||
| Imprest Amount Restored | 5,000 | ||||||
Practice Questions:
Question 1:
Prepare a Petty Cash Book from the following transactions for the week (Imprest amount: ₹3,000):
- Monday: Stationery ₹150, Bus fare ₹80
- Tuesday: Postage ₹100, Tea ₹50
- Wednesday: Taxi fare ₹200, Photocopying ₹120
- Thursday: Courier ₹90, Cleaning supplies ₹110
- Friday: Stationery ₹75, Auto fare ₹60
| Petty Cash Book | |||||||
|---|---|---|---|---|---|---|---|
| Date | Particulars | Receipts (₹) | Total (₹) | Stationery (₹) | Conveyance (₹) | Postage (₹) | Miscellaneous (₹) |
| Mon | Cash received | 3,000 | |||||
| Mon | Stationery | 150 | 150 | ||||
| Mon | Bus fare | 80 | 80 | ||||
| Tue | Postage | 100 | 100 | ||||
| Tue | Tea | 50 | 50 | ||||
| Wed | Taxi fare | 200 | 200 | ||||
| Wed | Photocopying | 120 | 120 | ||||
| Thu | Courier | 90 | 90 | ||||
| Thu | Cleaning supplies | 110 | 110 | ||||
| Fri | Stationery | 75 | 75 | ||||
| Fri | Auto fare | 60 | 60 | ||||
| Total Payments | 1,035 | 345 | 340 | 190 | 160 | ||
| Fri | Balance c/d | 1,965 | |||||
| Total | 3,000 | 3,000 | |||||
Answer: Balance = ₹1,965, Reimbursement needed = ₹1,035
Question 2:
The imprest amount is ₹4,000. During the month, total petty expenses were ₹2,800. What amount should be reimbursed to restore the imprest?
Solution:
In the Imprest System, the amount reimbursed equals the total expenses incurred.
Imprest Amount = ₹4,000
Total Petty Expenses = ₹2,800
Balance before reimbursement = ₹4,000 - ₹2,800 = ₹1,200
Amount to be Reimbursed = ₹2,800
After reimbursement: ₹1,200 + ₹2,800 = ₹4,000 (Imprest restored)
The petty cashier always receives back the exact amount spent to restore the original imprest amount.
Question 3:
Classify the following expenses into appropriate columns of a Petty Cash Book:
- a) Purchased envelopes ₹80
- b) Paid for office cleaning ₹150
- c) Metro train fare ₹45
- d) Registered post ₹60
- e) Tea for office meeting ₹120
- f) Printer cartridge ₹450
Solution:
| Expense | Column | Amount (₹) |
|---|---|---|
| a) Purchased envelopes | Stationery | 80 |
| b) Office cleaning | Miscellaneous | 150 |
| c) Metro train fare | Conveyance | 45 |
| d) Registered post | Postage | 60 |
| e) Tea for office meeting | Miscellaneous | 120 |
| f) Printer cartridge | Stationery | 450 |
Total Amount = ₹905
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