Accounting Sub Journals and Cash Book

The accounting procedure, for recording				cash and bank. It is so because every
information, involves two steps, namely				transaction must, ultimately, result in a
journalizing and posting. It follows that				cash transaction. Now if every cash
every business must maintain a journal (books				transaction is to be recorded in journal, it
of original or prime entry) and a ledger				will involve an enormous amount of labor in
(principal book). Thus the system of				debiting or crediting cash or bank account in
book-keeping originally envisages that all				the ledger for each transaction. Therefore,
the transactions must be recorded first in				it is convenient to have a separate book, the
the book of original record, i.e., journal				cash book, to record such transactions.
and then each transaction so recorded in the				Maintaining of cash book removes the
journal should be posted in the principal				necessity of having cash and bank accounts in
book, i.e., ledger. Subsequently it was				the ledger. This book enables us to know the
experienced that the labor of recording each				balance of cash in hand and at bank at any
transaction with narration in the journal and				point of time.
then posting each entry in two different
accounts in the ledger was enormous. The				Cash book consists of cash and bank accounts
procedure was more time-consuming and				taken 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 most				of original entry because cash and bank
of the transactions relate to receipts and				transactions are not recorded in any other
payments of cash; purchases of goods ;. sales				subsidiary 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 record				Types of cash books
transactions of a particular class is the
book of original or prime entry. It is also				The type of cash book to be used by any
known as sub-journal or subsidiary book. The				business will depend upon its nature and
system under which transactions of similar				requirements. 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 the				and bank columns).
basic rules of the double entry system.
				(4) Bank cash book (bank and discount
Generally the following subsidiary books are				columns).
used in the business:
				Generally, each business will use anyone of
(1) Cash book : records receipts and payments				the 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 purchases				Distinction 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 of				recorded date wise in order of occurrence.
the goods to the suppliers due to several				Cash 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 the				between 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, promissory				2. 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 of				entry 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 different				Cash 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 balance				of prime entry.
the checking is easier because books being
many, different persons can carry out the				3. In cash book entries are followed by
job.				narration also.

Cash Book				4. It records both the aspects of this
				transaction in cash and bank columns to
In any business, perhaps, the largest number				complete double entry posting.
of transactions of one nature must relate to

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Accounting Sub Journals and Cash Book