You are on page 1of 19

Session 4

Accounting
Mechanics: Basic
Records
Topics for discussion

 Cash Book
– Types of cash book
– Format for each type
– Petty Cash book

 Subsidiary books
 Bank Reconciliation Statement
– Why BRS?
– Preparation of BRS

10/18/08 Session 4 2
Cash book

 Special journal in which all cash transactions

are recorded directly

 Shows the cash receipts and payments

 Performs the functions of a journal and the

general ledger with regard to cash and bank

transactions

 Cash account is not opened, if cash book is

maintained
10/18/08 Session 4 3
Types of cash book
 Single column cash book (Simple cash
book)
– Cash Transactions are recorded in
chronological order
– Cash receipts on the debit side
– Cash payments on the credit side
– Difference is the cash in hand
 Double column cash book
– Discount and cash columns
– Only cash discount but not trade discount
 Three column cash book
– Discount, cash andSession
10/18/08
bank 4
columns 4
Format of a single column cash book

D Particula LF C Date Particula LF C


ate rs ash rs ash
(Rs) (Rs)

10/18/08 Session 4 5
Example: Simple Cash Book
Enter the following transactions of Rajesh in
single Column Cash Book.
2002 Rs.
Jan. 1. Commenced business with
2, 00,000
2. Paid Cash into bank
1,50,000
4. Purchased goods for cash
20,000
4. Sold goods for cash
15,000
5. Paid for stationary
500
7. Received from Arun
25,000
10/18/08 8. Paid to Gopal Session 4 6
Solution:
Simple Cash Book
Date Particulars L Amt. Date Particulars L Amt.
F (Rs.) F (Rs.)
2 2
002 002 2 By Bank
1 To Capital 15000
Jan. 4 A/c 2000 Jan. 4 By Goods A/c 0
00 5 By Stationary 20000
7 To Goods
A/c 8 A/c
1500 1 By Gopal A/c 500
To Arun A/c
0 0 By Furniture
A/c 10000
3 By Balance c/d
2500
2400 24000
1 4000
1 0
00 0
Feb 55500
To Balance
5550 Session 4
10/18/08 b/d 7
0
Format of a double column
cash book
D Particula LF Discou C Date Particula LF Discou Cash
ate rs nt ash( rs nt (Rs)
Rs)

10/18/08 Session 4 8
Format of a three column cash
book
Date Particular LF Discount Cash Bank Date Particulars LF Discount C B
s (Rs) ash ank
(Rs)

10/18/08 Session 4 9
Illustration: Triple Column Cash Book
Prepare a triple column Cash Book from the following
transactions of Madhura Enterprises for the Month of
January, 2002.
2002
Jan 1 Cash in hand 2,500
Cash at bank 10,000
2 Paid into bank 1,000
5 Brought furniture and issued cheque 2,000
8 Purchased goods for cash 500
12 Received cash from Mohinder 980
Discount allowed to him 20
14 Cash sales 4,000
16 Paid to Amarnath by cheque 1,450
Discount Received 50
19 Paid into Bank 400
23 Withdrawn from bank for private use 600
24 Received cheque from Patel 1,430
Allowed him discount 20
28 Withdrawn cash from bank for office use 2,000
31 Paid rent by cheque 800
Solution: Triple Column Cash
Book
Dr.
Date Particulars
Cr.
LF Dis. Cash Bank Date Particulars L Dis Cash Bank

(Rs.) (Rs.) (Rs.) F (Rs. (Rs.) (Rs.)

)
2002 2002

Jan. Jan

1 To Balance b/d 2,500 10,00 2 By Bank C – 1,000 –

2 To Cash A/c C – 0 5 By Furniture – – 2,000

12 To Mohinder A/c 20 980 1,000 8 By Purchase – 500 –

14 To Sales A/c 4,000 – 16 A/c 50 – 1,450

19 To Cash Account C – – 19 By Amarnath C – 400 –

24 To Patel A/c 20 400 23 A/c – – 600

28 To Bank A/c C 2,000 1,430 28 By Bank A/c C – – 2,000

31 By Drawings – – 800

31 A/c – 7,580 5,980

40 9,480 12,830 By Cash A/c 50 9,480 12,830

Feb1 To Balance b/d   7,580 5,980


By RentA/c      
Petty Cash Book
To record petty expenses
Imprest system
Format of a petty cash book

Amount Date Particula Total Postage & Printing Carriag Travelin Sundry
receive rs Amount telegrams & e g Expens
d paid stationar expense es
y s

10/18/08 Session 4 12
Subsidiary Books

Purchase Book
Purchase Return Book
Sales Book
Sales Return Book
Bills Receivable Book
Bills Payable Book
Journal Proper

10/18/08 Session 4 13
Bank Reconciliation Statement
(BRS)
Introduction
Reasons for difference between CB and PB
Uncollected cheques by the bankers

Non-presentation of cheques

Direct deposits by the clients

Direct collection

Service charges and interest on overdraft

Dishonor of customers cheques

Mistakes in the Pass Book

10/18/08 Session 4 14
Steps in Preparation of BRS
Take the CB or PB balance as starting point

Adjust all differences or errors

Obtain the balance as per the other book

Advantages of BRS
 Error Detection
 Delay in Collection Revealed
 Completion of Cash Book
 Chances of Embezzlement are Reduced

10/18/08 Session 4 15
Illustration: BRS
On 31st March, 2002, the Cash Book of a firm
showed a balance of Rs. 40000 at bank. From the
information given below prepare a Bank
Reconciliation Statement.
– Cheques issued for Rs. 7000 have not been
presented at the bank for payment yet.
– Cheques amounting to Rs. 8000 were paid in
on 29th March but have not been credited by
the bank.
– One cheque for Rs. 2500 was entered in the
Cash Book on 31st March, but was banked on
2nd April.
– A Cheque from Suresh, for Rs. 3000, paid in on
27th March was dishonoured but the advice of
the dishonour was received only on the 2nd
April 2002.

Solution:
Bank Reconciliation Statement as on March
31, 2002. Rs.
Balance as per Cash Book 40000
Add:
Cheques issued but not yet presented
7000 Interest 9,500
collected but not yet entered in the Cash Book
49500
2500

13600
-----------
35,900
Less:
Cheques paid in but not yet collected
8000
Cheques entered in Cash Book but not yet paid in
2500 Cheques dishonoured but not
Summarize:

 Different kinds of cash book

 How transactions are recorded in a petty

cash book?

 Discuss the various subsidiary books

 Reasons for preparing a BRS

 Steps involved in the preparation of BRS


10/18/08 Session 4 18
End of Session
4

You might also like