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CASH BOOK I S A BOOK OF ORI GI NAL ENTRY I N WHI CH

TRANSACTI ONS RELATI NG ONLY TO CASH RECEI PTS


AND PAYMENTS ARE RECORDED I N DETAI L.

WHEN CASH I S RECEI VED I T I S ENTERED ON THE DEBI T
OR LEFT HAND SI DE.
WHEN CASH I S PAI D OUT THE SAME I S RECORDED ON
THE CREDI T OR RI GHT HAND SI DE OF THE CASH BOOK.

CASH BOOK
TWO COLUMN CASH BOOK
A Two column cash book is one in which there are TWO columns on
each side - debit and credit side. One is used to record cash transactions,
the second is used to record bank transactions.
When a trader keeps a bank account it becomes necessary to record the
amounts deposited into bank and withdrawals from it. Fir this purpose
one additional column is added on each side of the cash book.
The main advantages of a three column cash book is that it is very
helpful to businessmen, since it reveals the cash and bank deposits at a
glance


CONTRA ENTRIES
If an amount is entered on the debit side of
the cash book, and the exact amount is
again entered on the credit side of the same
account, it is called "contra entry". Similarly
an amount entered on the credit side of an
account also may have a contra entry on
the debit side of the same account.

Contra entries are passed when:

Cash is deposited into bank by office : It is
payment from cash and receipt in bank. Therefore,
enter on credit side, cash column "By Bank" and on
debit side bank column "To Cash".
Such entries are marked in the cash book with the
letter "C" in the folio column
Cheque/Check is drawn for office use:It is
payment by bank and receipt in cash. Therefore,
enter on the debit side, cash column "To Bank" and
on credit side, bank column "By Cash".
BRS CAN BE DEFINED AS A
STATEMENT WHICH RECONCILES
THE BALANCE AS PER CASH BOOK
AND THE BALANCE AS PER PASS
BOOK SHOWING ALL CAUSES OF
DIFFERENCE BETWEEN THE TWO.
BRS
CAUSES OF DIFFERENCE
Cheques issued but not yet presented for payment
Cheques deposited into bank but not yet collected
Bank charges
Interest allowed by bank
Interest on overdraft
Amount collected by bank on standing instructions


CAUSES OF DIFFERENCE
Payment made by the bank as per the standing
instructions
Direct payments into the bank made by firms
customers
Dishonour of Cheques or Bills
Errors


Preparation of BRS
When Starts with a Cash Book Balance:

To be added:
i) Cheques issued but not yet presented
ii) Interest allowed by the bank
iii) Interest and dividends collected but not recorded
in the cash book
iv) Direct deposits by customers in the firms bank
account
Items to be subtracted:

i) Cheques deposited but not yet collected
ii) Bank Charges
iii) Interest on overdraft
iv) Amounts paid by the bank under standing instructions
but not recorded in the cash book
v) Cheques dishonoured but no entry made in the cash
book for the dishonour.

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