Is Cash Book A Journal Or Ledger

Is Cash Book A Journal Or Ledger?

From the previous discussion it appears that the Cash Book is the substitute for the Cash Account. In fact, no separate Cash Account is opened in the Ledger , Cash Book serves the purpose of the Cash Account. The entries in the Cash Book are regarded as one aspect of the Double Entry System - the other aspect is posted to the Ledger in the concerned account. L.C. Cropper remarked "Every entry in the cash book makes one half of a double entry ; the other half of the double entry appears on the opposite side of some account in the Ledger." From this  angle, "Cash Book is a Ledger".

On the other hand, all cash transactions are primarily recorded in the Cash Book in order of date and thereafter posted to the concerned ledger accounts. Judging from this angle, "Cash Book is a  Journal". Thus we see that a Cash Book is the 'mixture of Journal and Ledger' .

According to spicer & pegler:

"The Cash Book is actually a ledger account, but owing to the large number of entries made therein , it is kept in a separate book , called a Cash Book , which is used also as a book of prime entry."

The Columns of a Cash Book are explained below:

1. Date:

          The date of transaction is written in this column in two lines--in the first line, the year and in the second line, the name of the month followed by actual date.

2. Particular:

             In this column the name of the opposite account is written (the second aspect is cash transaction). Below this is written the narration of the transaction.

3. L.F(Ledger Folio):

        The page number of the ledger where the concerned (opposite) account has been opened, is written in this column. This will help to locate the account from the Ledger. It may be noted that in a Ledger account J.F. is  written as reference, while in a Cash Book L.F. is written. It is so, because cash transactions are not recorded in any journal.

4. Amount:

       The amount of the transaction is recorded in this column. The amount of cash received is recorded on the debit side in the amount column and the amount of cash paid is recorded on the credit side in amount column

5. V.NO(Voucher Number):

       The voucher number of each item of receipt and payment is also written. A voucher is necessary for each item of receipt and payment. Generally, a voucher has a serial number and this number is written in this column (V.NO).
        When cash is received from a debtor or customer, generally a receipt or "cash memo" is issued to the debtor which is called Receipt Voucher. Again, when money is paid to a creditor or supplier a receipt is obtained from him which is called "Payment Voucher" , Cash Transaction are recorded in the Cash Book on the basis of Receipt Voucher and Payment Voucher.

                      Types of Cash Book

At the beginning we have discussed that the Cash Book and the Bank Account are two busiest accounts in a Ledger and it will be logical to remove these two accounts from the Ledger to reduce the volume of the Ledger. We have seen that  how Cash A/c is removed from the ledger and instead of it, a Cash A/C is removed from the ledger and where the bank transaction are recorded? it will be discussed under this topic 'types or classes of cash book'.

      We must have a clear idea about transactions with a bank before we discuss about different classes of a Cash Book. In all business concerns cash transactions are numerous . Cash transactions may take place in the following two ways:

 1. By Cash 

 2. By Cheque

    Transactions in cash have been discussed in details in this chapter . so here we discuss about the transactions by cheque. Transactions involving large sums usually take place by cheques. Now let us see what we actually mean by transactions by cheques.