Ca h Book

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Ca h Book
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Whats on the menu?

• Difference between the cash and bank account
• Advantages of the cash book
• 2-column Cash Book
• Contra Entries
• Posting entries in cash book to ledger accounts

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Cash?? Bank??
How much ang pow money did you receive
from the last Chinese New year?

• What did you do with the money?

How much are you left with?
Now let us try to record the transactions in the
cash and bank accounts on the board.
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Cash?? Bank??

• Cash Account
• Involves money kept in the office
• Usually small amount of money involved
• Bank Account
• The rest of money NOT in cash account
• Kept in current account of bank (not in fixed
  deposit account)

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Cash Account and Bank Account

• How are they similar?
• Both are assets
• An increase ? Dr
• A decrease ? Cr

• An inflow of cash increase of assets ? debit
• An outflow of cash decrease of assets ? credit

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Cah Book?

• What is a cash book?
• The cash book consists of both the cash and bank
  accounts.
• There is no need to maintain separate cash and
  bank accounts.

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2 column Cah Book
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2 column Cah Book
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Cah Book?

• Cash book as a book of original entry?
• Information from source documents are recorded
  directly into the cah book

• What are the source documents?
• Receipts
• Cash till slips
• Payment vouchers
• Counterfoils of cheques

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Source Documents
Taken from page 114 115 of TB
Receipt
Counterfoil
Cash till slip
Cheque
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Source Documents
Taken from page 114 115 of TB
Paying-in slip
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Source Documents
Taken from page 114 115 of TB
Payment voucher
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Advantages of a Cah Book

• Reduces the number of entries in the ledger
• All cah entries are recorded in cah book.
• So ledger does NOT include any cah entries at
  all
• The number of accounts in the ledger is reduced
• Higher efficiency
• One person can take charge of the cah book
• Easier reference to the Cash and Bank account
• Both accounts are found in the Cah book
• All money received and paid on a particular date
  are recorded on the same page instead of on
  different pages in the ledger.

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2 column Cah Book

• Therefore, the cash book is like a journal and
  ledger.
• Why?
• Journal - information from the source document is
  recorded
• directly into it
• Ledger the cash and bank accounts are not found
  
• in the ledger books at all

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Exercise 1

• Now, lets try to record some entries into OUR
  cah book
• On April 2, you received
• A birthday gift 500 in the form of cheque from
  Mum and Dad
• A birthday gift 100 cash from Aunty Mary
• A birthday gift 40 cash from Cousin Lily

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Exercise 1

• On April 2, you paid
• 200 in cheque for expenses incurred for holding
  birthday party at Hard Rock Café
• Cash 10 for food bought for grandma who was
  unable to attend your party
• Donate a 40 cheque to National Kidney Foundation
  (NKF) as a good deed.

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Dr (IN)
Two-column Cash Book
Cr (OUT)
Bank
Cash
Particulars
Date
Bank
Cash
Particulars
Date




2002
2002
Party 200
Apr 2
Birthday Gift - Parents
500
Apr 2
Grandmas food 10
Birthday Gift Aunty Mary 100
NKF 40
Birthday Gift Cousin Lily
40
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Contra Entry

• What is a contra entry?
• To record the following transactions
• When money from the bank is taken out for office
  use
• When money from the office is put into the bank

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2002 May 2 100 is withdrawn from the bank for
office use May 25 250 from the office is paid
into the bank
Dr (IN)
Cr (OUT)
Two- column Cash Book
Bank
Cash
Cash
Particulars
Date
Bank
Particulars
Date




2002
2002
May 2 Bank 100
May 2 Cash
100



25 Bank 250
25 Cash
250
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Now, lets try a question

• Pair with the partner next to you
• Post the entries on worksheet 1

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Posting to ledgers
Cr (OUT)
2002
2002
Jan 1 Balance b/d
100 850 Jan 7 Purchases
50 5 Ken
150 20 Stationery
35 18 Sales
120
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Posting to ledgers
Ken

Particulars
Date

Particulars
2002 Jan 5 Bank
150
2002 Jan 7 Cash
50
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Posting to ledgers
2002 Jan 18 Cash
120
2002 Jan 20 Cash
35
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Posting to ledgers

Based on the cash book prepared for worksheet 1,
do the posting to the appropriate ledgers.
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So, what have I learnt?

• Difference between the cash and bank account
• Advantages of the cash book
• 2-column Cash Book
• Contra Entries
• Posting to ledgers