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Accounting Sub Journals and Cash Book

The accounting procedure, for recordingcash and bank. It is so because every
information, involves two steps, namelytransaction must, ultimately, result in a
journalizing and posting. It follows thatcash transaction. Now if every cash
every business must maintain a journal (bookstransaction is to be recorded in journal, it
of original or prime entry) and a ledgerwill involve an enormous amount of labor in
(principal book). Thus the system ofdebiting or crediting cash or bank account in
book-keeping originally envisages that allthe ledger for each transaction. Therefore,
the transactions must be recorded first init is convenient to have a separate book, the
the book of original record, i.e., journalcash book, to record such transactions.
and then each transaction so recorded in theMaintaining of cash book removes the
journal should be posted in the principalnecessity of having cash and bank accounts in
book, i.e., ledger. Subsequently it wasthe ledger. This book enables us to know the
experienced that the labor of recording eachbalance of cash in hand and at bank at any
transaction with narration in the journal andpoint  of  time.
then posting each entry in two different
accounts in the ledger was enormous. TheCash book consists of cash and bank accounts
procedure was more time-consuming andtaken out of ledger and maintained
resulted  in  higher  establishment  cost.separately; thus it is a substitute of ledger
for cash and bank accounts. It is also a book
It is but natural that in every business mostof original entry because cash and bank
of the transactions relate to receipts andtransactions are not recorded in any other
payments of cash; purchases of goods ;. salessubsidiary  book.
of goods etc. It was found to be convenient
and economical to keep separate books to
record each particular class of transactions.
Each separate book meant to recordTypes  of  cash  books
transactions of a particular class is the
book of original or prime entry. It is alsoThe type of cash book to be used by any
known as sub-journal or subsidiary book. Thebusiness will depend upon its nature and
system under which transactions of similarrequirements. It may be anyone of the
nature are entered in the relevant'following:
subsidiary book and on the basis of which
ledger is written is known as the 'practical(1)  Single  column  cash book (cash column).
system of book- keeping'. This system reduces
labor and time of recording the transactions(2) Double column cash book (cash and
as impersonal accounts, viz., sales account,discount  columns).
purchases account etc., receive the posting
of totals and not of individual transactions.(3) Triple column cash book (cash, discount
However, this system also conforms to theand  bank  columns).
basic  rules  of  the  double  entry  system.
(4) Bank cash book (bank and discount
Generally the following subsidiary books arecolumns).
used  in  the  business:
Generally, each business will use anyone of
(1) Cash book : records receipts and paymentsthe above types of cash book along with
of cash including transactions relating to"petty cashbook" which is maintained on
bank;memorandum  basis.
(2) Purchases book: records credit purchasesDistinction  between  cash  A/c and Cash book
of goods meant for sale or for conversion
into  finished  goods;Actually cash book is a perfect substitute of
cash account. In both, cash transactions are
(3) Returns outwards book: records return ofrecorded date wise in order of occurrence.
the goods to the suppliers due to severalCash balance as on any date can be
reasons;ascertained by balancing both on any day
desired. Yet there are some differences
(4) Sales book: records credit sales of thebetween  the  two  as  given  below:
goods  dealt  in  by  the  business;
Cash  account
(5) Returns inwards book : records the return
of goods by the customers to the business ;1.  Is  an  account  in  the  ledger.
(vi) Bills receivable book: records the
receipts of bills of exchange, promissory2. Cash account is part of the ledger. Cash
notes  and  hundies  of  various  parties;account is opened in the ledger in which
posting is done from some book of original
(6) Bills payable book: records the issue ofentry  i.e.  journal
bills exchange, promissory notes and hundies
to  the  various  parties:3. In cash account posting is not followed by
narration.
Advantages  of  sub-journals
4. It only records one aspect of transaction
(1) It results in saving of time by (a)involving  cash  and  bank.
enabling the recording procedure to be
carried on simultaneously in differentCash  book
subsidiary books and (b) by posting the
periodical totals in the impersonal accounts.1. Is a separate book of accounts forming
part  of  accounting  system.
(2) It makes information available regarding
each  particular  class  of  transactions.2. Cash book records entries directly from
transactions and these is no need for a book
(3) At the time of preparing trial balanceof  prime  entry.
the checking is easier because books being
many, different persons can carry out the3. In cash book entries are followed by
job.narration  also.
Cash  Book4. It records both the aspects of this
transaction in cash and bank columns to
In any business, perhaps, the largest numbercomplete double entry posting.
of transactions of one nature must relate to



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