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There are 3 types of cash book namely:

i.       Single column cash book
ii.      Two column cash book
iii.     Three column cash book

Single Column Cash Book

In the ledger, details of cash transactions are sometimes recorded separately. That is, details of money recorded and paid out in cash are recorded in the cash account. This cashbook is usually kept by petty traders because it does not record bank transactions. There is a single column on the left (debit) side for cash coming in (receipts) and another single column on the credit side for cash payments

Two Column Cash Book

In the two columns cash book, the cash and bank accounts are recorded in one book. In this book, we have two accounts:

  1. Cash account
  2. Bank account

The cash and bank account are placed side by side on the debit and credit sides of the cash book.

Since the development of banking most firms, these days prefer to deal in cheques or other such bills of exchange. And so having a bank column in your cash book makes things simpler to understand.


Contra Entry

 Sometimes, some transactions are recorded two times in the cash book.

Often cash is withdrawn from the bank for use in business. In such a case, the amount is entered in the bank column on the payments side and also in the cash column on the receipts side. In the reverse case when cash is sent to the bank, the amount is recorded in the bank column on the receipts side and in the cash column on the payments side.
Against such entries, the letter ‘C’ should be written in the L.F. column to indicate that these are contra transactions and are not posted into the ledger account

Three Column Cash Book and the Discount Column

In the two-column cash book, we identified the two important columns created for cash and bank transactions.

The three column cash book has the cash, the discount and additionally the bank columns in it.

A triple column cash book is usually maintained by large firms which make and receive payments in cash as well as by bank and which frequently receive and allow cash discounts.

Cash Discount: This is an allowance received or reduction made when cash is paid promptly.

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Discount Allowed: This is an allowance or reduction given by the business organization to debtors or consumers for prompt payment of cash.

Discount Received: This is an allowance or reduction granted by creditors or suppliers to the business organization for prompt payment of cash.

In three column cash book, the discount allowed is placed on the debit side alongside the cash and bank accounts while the discount received is placed alongside the cash and bank account on the credit side. The format of the three-column cash book is shown below.

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The discount column is a memorandum column, figures entered into it are added and not balanced.


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