Chapter – 08

Books of Original Entry – Cash Book

SUBSIDIARY BOOKS/BOOKS OF ORIGINAL ENTRY Introduction: In the previous chapter, we have read
that all the business transactions are first of all recorded in the journal in chronological order. Journal is the
basic book of original entry as all the transactions are recorded for the first time in it. This system of
recording is useful to small businesses. As the size of business increases, volume of transactions also
increases and we have several cash transactions, several transactions related to credit purchases, credit
sales, purchase return, sales return and so on. This, to simplify the process of recording of business
transactions of similar and repetitive nature, journal is further sub divided into a number of books of original
entry /subsidiary books/special purpose books/special journals. For example, all cash transactions are
recorded in one book, all credit purchases of goods in another book, all credit sales in another book and so
on.
Subsidiary Books: Subsidiary books are special purpose books for recording business transactions of
similar and repetitive nature in chronological order (date wise) from the vouchers supported with source
documents. When transactions are recorded in such books, there will be no journal entry. The transactions
are recorded directly in the concerned subsidiary book and they are directly posted to ledger. This system of
accounting is called as practical system of accounting.
Types of Subsidiary Books: -
The most commonly used subsidiary books used by business entities are:
1. Cash Book: This book is used for recording all cash transactions i.e., all receipts of cash and all
payments of cash All banking transactions of receipts and payments are also recorded in cash book with
bank column

2. Purchases Book: All the transactions of purchase of goods and services on credit basis are recorded in
this book.

3. Sales Book: All the transactions pertaining to credit sales of goods and services are recorded in this
book.

4. Purchases Return Book or Return Outward Book: If the goods purchased on credit is returned to the
supplier, such return is recorded in the purchases return book. It is also called as Return Outward as goods
will go from us to the supplier.

5. Sales Return Book or Return Inward Book: If the customer to whom goods are sold on credit, returns
goods, it is recorded in the sales return book. It is also called as return inward as the returned goods has
come to us back
[Link] Receivable Book: This book is used to record receipts of promissory notes, bill of exchange in this
book. (Not in Syllabus)
[Link] Payable Book: We record the issue of promissory notes or hundi or acceptance of bills of exchange in
this book. (Not in Syllabus)
8. Journal Proper: All those transactions which could not be recorded in Subsidiary books mentioned
above, are recorded in the journal proper. It is similar to journal with the only difference that journal entry of
only those transactions are recorded in it which are not recorded in the subsidiary books mentioned above
e.g., credit purchase of asset, credit sale of asset, adjustment entries like entry for bad debt, depreciation,
interest on capital, interest on drawing etc.

Cash Book
Cash book is a book of prime entry. All the cash and bank transactions of receipts and payments are
recorded date-wise in this book. All the cash receipts are recorded on the debit side of cash book and all
payments are recorded on the credit side of cash book.
Features of Cash Book:
i- Only cash transactions are recorded in cash book. Bank transactions can also be recorded in it.
ii- Receipt of cash is recorded on the debit side and payment of cash is recorded on the credit side.
 iii- It is usually balanced daily or on periodical basis to know the balance of cash in hand and cash
at bank.
iv- Transactions are recorded date-wise.
v- Cash account is not prepared if cash book is maintained.
Types of Cash Books:
01- Simple cash book or single column Cash Book:
02- Double column cash book or Two column cash Book. (Cash & Bank Column Cash Book)
03- Petty Cash Book.

Format of Cash Book:

Cash Book (Simple Cash Book)
Date Particular V. L.F. ₹ Date Particular V. L.F. ₹
No. No.

Receipts Payments

Illustration 01: - Enter the following transaction in a simple cash Book of Ashok. 2019
Jan 01: Commenced business with cash ₹20000.
Jan 04; Bought goods for cash ₹18000.
Jan 07: Sold goods for cash ₹9000.
Jan 09: Paid to Gopal ₹4000.
Jan 13: Received cash from Amit ₹8000.
Jan 15: Bought furniture ₹3000.
Jan 17: Paid interest ₹500.
Jan 19: Received commission ₹400.
Jan 23: Withdrew cash for personal use ₹2000.
Jan 25: Paid electricity Bill ₹800.
Jan 27: Paid Salary ₹1200.
Jan 29: Cash Sales ₹8000.
Jan 31: Bought goods from Ram on credit ₹3000.
Solution 01: -
Cash Book (Simple Cash Book)
Date Particular V. L.F. Cash Date Particular V. L.F. Cash
No. No.
01 Jan To Capital A/c 20000 04 Jan By Purchases A/c 18000
07 Jan To Sales A/c 9000 09 Jan By Gopal A/c 4000
13 Jan To Amit A/c 8000 15 Jan By Furniture A/c 3000
19 Jan To Commission A/c 400 17 Jan By Intt A/c 500
29 Jan To Sales A/c 8000 23 Jan By Drawings A/c 2000
25 Jan By Electricity Bill 800
27 Jan A/c 1200
31 Jan By Salary A/c 15900*
By bal c/d
45400 45400
01 Feb To Bal b/d 15900