Cash Book Class 11 Accountancy Notes: Types, Formats and Important Entries by PW

Cash book questions require you to identify whether a transaction involves cash, bank or discount before recording it on the correct side. You need to understand the treatment of receipts and payments, distinguish discount allowed from discount received, and identify when a cheque should be entered in the cash book or Journal Proper. These concepts become especially important when balancing cash books, recording contra entries and handling petty cash.

Physics Wallah’s Cash Book Notes explain these concepts through focused sections on different cash book formats, GST treatment, cheque transactions and petty expenses. Use the examples and journal entries to understand the correct accounting treatment, revise important rules and practise recording transactions accurately.

Meaning and Functions of a Cash Book

A cash book records two main types of transactions:

• Cash receipts: Money received by the business, such as cash sales and payments received from customers.

• Cash payments: Money paid by the business, such as rent, salaries, stationery and other expenses.

It follows two basic accounting principles:

• Debit what comes in.

• Credit what goes out.

Why Is a Cash Book Called a Journalised Ledger?

A cash book performs the functions of both a journal and a ledger.

• As a journal: It records cash transactions for the first time. These transactions do not need to be recorded separately in the general journal.

• As a ledger: It is totalled and balanced like a cash account.

Therefore, a cash book is called a journalised ledger because it combines the initial recording of transactions with the balancing of accounts.

Types of Cash Book

The main types of cash book are:

1. Single-Column Cash Book: Contains only a cash column.

2. Double-Column Cash Book: Contains cash and discount columns or cash and bank columns.

3. Triple-Column Cash Book: Contains cash, bank and discount columns.

4. Petty Cash Book: Records small and frequent business expenses.

The triple-column cash book combines the functions of the relevant double-column cash books. The main types generally covered in Class 11 Accountancy are the single-column cash book, double-column cash book and petty cash book.

Single-Column Cash Book: Format and Rules

A single-column cash book records only cash receipts and cash payments. It follows the same structure as a cash account in the ledger.

It has two sides:

• Debit side: Records all cash receipts.

• Credit side: Records all cash payments.

Both sides generally contain the following columns:

• Date

• Particulars

• Ledger Folio (L.F.)

• Amount

A receipt or voucher number may also be included when the question provides the required details.

What Is Ledger Folio (L.F.)?

The Ledger Folio column records the page number of the relevant ledger account. Since a cash book also performs the function of a ledger, it includes this column for reference.

Balancing a Single-Column Cash Book

Follow these steps to balance a single-column cash book:

1. Calculate the total of the debit and credit sides.

2. Compare both totals.

3. Record the difference as the closing cash balance on the shorter side.

4. Carry the closing balance forward as the opening balance of the next period.

Important: Cash is an asset and normally has a debit balance. Therefore, a cash book cannot normally show a credit balance because a business cannot pay more cash than it possesses.

Treatment of Common Transactions

Remember the following rules while recording transactions:

• Cash received from a customer: Debit side.

• Cash sales: Debit side.

• Cash purchases: Credit side.

• Rent, salary, stationery and other expenses paid in cash: Credit side.

• Credit purchases and credit sales: Not recorded because no cash movement takes place.

• Trade discount: Deduct it before recording the actual cash amount.

Example: If goods worth Rs. 2,000 are purchased with a 10% trade discount, the amount recorded is Rs. 1,800.

GST in a Simple Cash Book

GST components must be recorded separately when a business makes cash purchases or cash sales.

• Cash purchases: The payment includes the purchase amount, input CGST and input SGST. Record the input tax components separately.

• Cash expenses with GST: Input CGST and input SGST are recorded separately.

• Cash sales: The amount received includes the sale value, output CGST and output SGST. Record the output tax components separately.

• Credit sales: Not recorded in the cash book because no cash is received at the time of sale.

Cash Deposited into or Withdrawn from Bank

• Cash deposited into bank: Cash decreases. Record the transaction on the credit side of the cash column.

• Cash withdrawn from bank: Cash increases. Record the transaction on the debit side of the cash column.

Double-Column Cash Book: Cash and Discount

A cash-and-discount cash book contains separate columns for cash and discount on both the debit and credit sides.

• The debit side records cash received and discount allowed.

• The credit side records cash paid and discount received.

Discount Allowed

Discount allowed is the discount a business gives to its customer when the customer pays less than the amount due.

It is an expense for the business and is recorded on the debit side.

Discount Received

Discount received is the discount a business obtains from a supplier when it pays less than the amount due.

It is an income for the business and is recorded on the credit side.

Remember these two rules:

• Receive less than the amount due from a customer = Discount allowed.

• Pay less than the amount due to a supplier = Discount received.

Balancing the Cash and Discount Columns

The cash column is totalled and balanced to calculate the closing cash balance.

However, the discount columns are only totalled; they are not balanced. The discount amounts are posted separately to the Discount Allowed Account and Discount Received Account.

Exam Tip: Always remember that the cash column is balanced, whereas the discount columns are only totalled.

Double-Column Cash Book: Cash and Bank

A cash-and-bank cash book contains separate columns for cash and bank transactions.

Both the cash and bank columns are totalled, balanced and carried forward.

Debit and Credit Balance of Bank

Unlike cash, a bank balance can have either a debit or a credit balance.

• Debit balance: Indicates that money is available in the bank. It is an asset.

• Credit balance: Indicates a bank overdraft, which means the business has withdrawn more money than it has available. It is a liability.

Remember: A cash balance is normally a debit balance, but a bank balance may be either debit or credit.

Cheques, Endorsement and Dishonour

The treatment of a cheque in a cash book depends on whether it is deposited into the bank immediately or at a later date.

Cheque Deposited Immediately

When a business receives a cheque from a customer and deposits it into the bank on the same day, record it in the bank column.

Journal Entry:

Bank Account Dr.

To Customer's Account

Cheque Deposited Later

When a cheque is received but deposited into the bank later, record the two stages separately.

1. On receiving the cheque:

Cheque-in-Hand Account Dr.

To Customer's Account

This transaction is recorded in the Journal Proper, not the cash book.

2. When the cheque is deposited into the bank:

Bank Account Dr.

To Cheque-in-Hand Account

This transaction is recorded in the cash book.

Cheque Endorsement

Cheque endorsement means transferring a cheque to another person by signing on its back.

When a business transfers a cheque to another person without depositing it into the bank, the transaction is called an endorsement.

An endorsed cheque is not recorded in the cash book because no cash or bank transaction takes place.

Dishonour of a Cheque

A cheque is said to be dishonoured when the bank refuses to make the payment.

When a previously deposited cheque is dishonoured, the original bank entry must be reversed.

Journal Entry:

Customer's Account Dr.

To Bank Account

If a discount was allowed to the customer when the cheque was received, that entry must also be reversed.

Journal Entry:

Customer's Account Dr.

To Discount Allowed Account

Important: Both the original cheque entry and the related discount entry must be reversed when applicable.

Contra Entries

A contra entry is a transaction that affects both the cash account and the bank account. It records the transfer of money between cash and bank.

The two common contra entries are:

1. Cash Deposited into Bank

When cash is deposited into the bank, the bank balance increases and the cash balance decreases.

Entry:

Bank Account Dr.

To Cash Account

2. Cash Withdrawn from Bank

When cash is withdrawn from the bank for business use, the cash balance increases and the bank balance decreases.

Entry:

Cash Account Dr.

To Bank Account

How to Identify a Contra Entry?

A contra entry is recorded on both sides of the double-column cash book. The letter C is written in the Ledger Folio (L.F.) column to indicate that the transaction is complete within the cash book.

No separate ledger posting is required for a contra entry.

Petty Cash Book and Imprest System

A petty cash book records small and frequent expenses incurred in the day-to-day operations of a business.

Examples include:

• Postage

• Stationery

• Refreshments

• Repairs

• Travelling expenses

• Telep

Types Of Petty Cash Book

1. Non-Analytical Petty Cash Book

2. Analytical Petty Cash Book

Imprest System

Under the Imprest System, the petty cashier receives a fixed amount at the beginning of a period. After spending part of it, the exact amount spent is reimbursed.

For example:

• Fixed imprest: Rs. 1,000

• Amount spent: Rs. 900

• Balance remaining: Rs. 100

• Reimbursement: Rs. 900

• Amount available again: Rs. 1,000

Memory Tip: Imprest System means a fixed cash amount restored through reimbursement.

Non-Analytical Petty Cash Book

A simple petty cash book records:

• Amount received from the head cashier.

• Date and particulars.

• Voucher number.

• Ledger folio.

• Petty expenses paid.

• Closing balance.

The closing balance is shown as Balance c/d and becomes Balance b/d in the next period.

Analytical Petty Cash Book

An analytical petty cash book adds separate columns for expense categories such as:

• Travelling

• Cartage

• Postage and Telegram

• Printing and Stationery

• Repairs

• Wages

• Refreshments

• CGST and SGST

The total payment is recorded in the main amount-paid column, while the same amount is classified under the relevant expense column. Tax components are recorded separately where applicable. The main advantage is better expenditure analysis. The head cashier can compare category-wise totals and identify excessive or unnecessary spending.

Revise the different types of cash books, practise their formats and understand the treatment of cash, bank, discount, GST and cheque transactions. Pay special attention to contra entries, cash book balancing and the Imprest System, as these concepts help you solve practical questions accurately. To strengthen your preparation, practise NCERT questions and Physics Wallah's Class 11 Accountancy will help you in understanding the syllabus, marks weightage and preparation tips.