Page 59 - NOTES- CASH BOOK

152 Accountancy

(i) Cash received is entered on the debit side of cash book.
(j) Transaction recorded both on debit and credit side of cash book is known as
contra entry.
(k) Balancing of account means total of debit and credit side.
(l) Credit purchase of machine is entered in purchase journal.

Key Terms Introduced in the Chapter
• Posting • Sales (Journal) Book
• Day books • Balancing of Accounts
• Cash book • Purchase (Journal) book
• Petty Cash book • Purchases return (Journal) Book
• Sales return (Journal) Book
Summary with Reference to Learning Objectives
1. Journal : Basic book of original entry.
2. Cash book : A book used to record all cash receipts and payments.
3. Petty cash book : A book used to record small cash payments.
4. Purchase journal : A special journal in which only credit purchases are recorded
5. Sales journal : A special journal in which only credit sales are recorded
6. Purchases Return Book : A book in which return of merchandise purchased is
recorded.
7. Sales Return Book : A special book in which returns of merchandise sold on
credit are recorded.

Questions For Practice
Short Answers
1. Briefly state how the cash book is both journal and a ledger.
2. What is the purpose of contra entry?
3. What are special purpose books?
4. What is petty cash book? How it is prepared?
5. Explain the meaning of posting of journal entries?
6. Define the purpose of maintaining subsidiary journal.
7. Write the difference between return Inwards and return ouwards.
8. What do you understand by ledger folio?
9. What is difference between trade discount and cash discount?
10. Write the process of preparing ledger from a journal.
11. What do you understand by Imprest amount in petty cash book?
Long Answers
1. Explain the need for drawing up the special purpose books.
2. What is cash book? Explain the types of cash book.
3. What is contra entry? How can you deal this entry while preparing double
column cash book?

2018-19