 When the number of business transactions is very large, recording of all transactions in one journal will not be convenient but also cause delay in collecting information required. Thus it is practicable to divide the journal into sub- journal in order to facilitate the recording.

 Specialization of efficiency  Proper & systematic record of business transactions  Division of work  Minimizes frauds & errors  Availability of information at one place

Cash transactions are usually numerous in any business concern; it is therefore to secure efficiency in work that a separate book is used to record all cash transaction.

 A cash book is a book which contains record of all transactions relating to cash receipts & cash payments. it enables a businessman to know the balance of cash in hand & at bank at any point of time.

Cash book has a dual role :  It is both a book of prime or original entry & also a book of final entry (ledger)  It is a book of original entry as all cash transactions are first recorded in it & then posted to the respective ledger accounts.

 It also act as a ledger, since it is designed in the form of a cash a/c with cash receipts being recorded on the debit side & cash payments on the credit sides.

Cash book as a ledger:  It contain a condensed and classified record of all the transaction.  The ruling of the cash book does not differ from that of ledger.

 It prevents duplication of work  Both cash and bank transactions can be recorded in the cash book.  Provides trader with the daily cash and bank balance

 Single column cash book : only cash transactions( receipts & payment)  Double column cash book: cash & discount a/c transactions.  Three column cash book: cash, discount & bank a/c transactions.

 Debit the cash book (cash column) by all the cash and cheques received, except: 1 Payment made direct to the bank, interest received by bank. 2 Cash and cheques paid into the bank on the same day as received.

 Debit all the cash book (bank column) with all the amount paid into the bank or received by the bank.  Credit the cash book (cash column) with all payment in cash, and with any cheques received from the customer (debtors) and endorsed over to customers

 Credit the cash book (bank column) with : 1 All payments by cheques drawn on the bank. 2 All payment made by the bank on order to pay, other than by drawing of cheque.

 Contra means, in other side ( against). When both debit & credit aspects of the same transactions are recorded in the cash book but on the opposite side, such entry called contra entry.  These entries are made either for cash deposited into the bank or cash withdrew from bank for office use.