Cash Books

Cash books To try make accounting simple, the cash account and the bank account are sometimes put together. When 2 or more accounts are put together, we call it a book. Dr Cash a/c Cr Dr Cr Cash Bank Aug 1 H.Jun 2,500   F.Dak 100 M.Mak 356 Aug 5 R.Tan 400 W.Win 1,456 A.Sam 392 Aug 31 Balances c/d 2,756 1,448 Sept 1 Balances b/d 2,856 1,848 Aug 1 H.Jun 2,500 M.Mak 356 Sept1 Balance b/d 2,856 Aug 1 F.Dak 100 Aug31 Balance c/d 2,756 Dr Bank a/c Cr Aug 5 W. Win 1,456 A.Sam 392 Sept1 Balance b/d 1,848 Aug 1 R.Tan 400 Aug31 Balance c/d 1,448

Folio Columns In real life a business would have thousands of cash and bank transactions, so it is not enough just to have the basic narration. Dr Cash a/c Cr We call this narration Aug 1 H.Jun 2,500 M.Mak 356 Sept1 Balance b/d 2,856 Aug 1 F.Dak 100 Aug31 Balance c/d 2,756 We call this narration More information is needed, so in large businesses, an extra column is added. This is called a folio column. To minimise the risk of any mistakes, we only complete the folio column when the double entry (narration in 2 T-a/c) has been completed. Example… a receipt of cash from C.Kelly whose T-a/c was on page 45 of the sales ledger book and the cash is record on page 37 in the cash book, the information in the folio column would appear… Cash book – SL 45 Sales ledger – CB 37

Folio columns Often, a business will receive cash from a customer and pay it in to the bank on the same day, so the cash T-a/c will show a debit and credit on the same page in the cash book. Therefore in the folio column there is no need to add additional information. We simply use ‘ȼ’ (contra) in the folio column.

ȼ 1,000 ȼ Cash

Discounts (page 154) A business may have two types of discounts in their books: Discounts allowed – cash discounts allowed by the business to its customer. Discounts received – cash discounts received by a business from its suppliers when they pay their suppliers.

Ledgers Sales ledger All the T-a/c for M.Sloan All the T-a/c for D.Pavit All the T-a/c for e.Farma These are all ‘sales’ T-accounts, so we group them all together Sales ledger All the T-accounts for sales we put together, this is called a ledger We do the same for all the purchases accounts (purchase ledger). Any ‘one-off’ accounts we put in a general ledger

Complete the worksheet 