GSEB Class 11 Accounts Notes Part 1 Chapter 7 Cash Book and Its Types

This GSEB Class 11 Commerce Accounts Notes Part 1 Chapter 7 Cash Book and Its Types covers all the important topics and concepts as mentioned in the chapter.

Cash Book and Its Types Class 11 GSEB Notes

In the business units proportion of cash transactions is comparatively much more than the credit transactions. But today’s credit transaction would be a cash transaction in future, therefore it is necessary to keep a separate book for recording the cash transactions of the business. If the entry for cash comes in the business or cash goes out from the business is directly recorded in the cash book instead of recording it in the journal, it would save the time and the energy. Moreover, the daily cash balance or the cash balance at the end of predecided period can also be known from cash book. Thus, cash book serves the dual purpose, of a journal and of a cash account. In short, cash book is a subsidiary book which is prepared for the information of accounting entries of the cash transactions.

→ Cash book serves the purpose of journal and cash account both.

→ Cash balance and Bank balance or Bank overdraft can be known at the end of the given period by maintaining the cash book.

→ ‘Contra transaction’ means such financial transaction, in which cash and bank, both the accounts get affected. This type of transaction is recorded on both the sides of cash book.

→ Generally, contra transactions are of two types :

  1. Cash deposited in the bank and
  2. Cash withdrawn from the bank.

GSEB Class 11 Accounts Notes Part 1 Chapter 7 Cash Book and Its Types

→ Cheque is negotiable instrument. There are three partise in the cheque :

  1. Drawer of the cheque,
  2. Drawee of the cheque (Bank) and
  3. Receiver of money.

→ Petty cashier prepares the Petty cash book. It can be prepared in two ways :

  1. Simple or Columnar petty cash book and
  2. Petty cash book on imprest system.

→ According to necessity of any business or profession, cash book can be prepared as per any one of the following three types :

  1. Simple cash book
  2. Two columnar cash book and
  3. Three columnar cash book.

→ Two columnar cash book can be prepared in three ways :

  1. Cash and discount columnar
  2. Bank and cash columnar
  3. Bank and discount columnar.

→ Only cash transaction are recorded in the simple cash book.

→ As the format of cash book is like the structure of an account.

→ In two or three columnar cash book, the closing balance of discount column is not worked out, only the total of discount is made on the both side of cash book.

→ Endorsement transaction is not recorded in cash book, but it is recorded in journal proper.

→ Bank and discount columnar cash book is not very popular, but in practice, three columnar cash book is more popular.

→ NEFT means National Electronic Fund Transfer.

→ RTGS means Real Time Gross Settlement.

→ Bank book is maintained to record the bank transactions easily.

GSEB Class 11 Accounts Notes Part 1 Chapter 7 Cash Book and Its Types

→ The form and structure of the Bank book is exactly like the cash book.

→ The book kept for keeping a record for the small expenses is known as Petty Cash Book.

→ A fixed amount is maintained at the beginning of each period in petty cash book on imprest system.

→ Cash book is the most important type of subsidiary book.

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