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TOPIC : THE CASH BOOK

TOPIC : THE CASH BOOK. THE CASH BOOK IS A BOOK OF ORIGINAL ENTRY IN WHICH CASH RECEIPT AND PAYMENT ARE RECORDED. THE RIGHT HAND OF THE CASH BOOK IS THE GIVING SIDE CALLED THE CREDIT SIDE WHILE THE LEFT HAND SIDE OF THE CASH BOOK IS THE RECEIVING SIDE CALLED THE DEBIT SIDE. Types of cash book.

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TOPIC : THE CASH BOOK

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  1. TOPIC : THE CASH BOOK • THE CASH BOOK IS A BOOK OF ORIGINAL ENTRY IN WHICH CASH RECEIPT AND PAYMENT ARE RECORDED. • THE RIGHT HAND OF THE CASH BOOK IS THE GIVING SIDE CALLED THE CREDIT SIDE WHILE THE LEFT HAND SIDE OF THE CASH BOOK IS THE RECEIVING SIDE CALLED THE DEBIT SIDE

  2. Types of cash book • SINGLE COLUMN CASH BOOK • TWO COLUMN CASH BOOK • THREE COLUMN CASH BOOK • PETTY CASH BOOK

  3. FORMAT OF DIFFERENT CASH BOOK • SINGLE COLUMN CASH BOOK IS A BOOK USED TO RECORD CASH TRANSACTION ONLY • TWO COLUMN CASH BOOK IS A BOOK USED TO RECORD BOTH CASH AND CHEQUE [BANK] TRANSACTIONS.

  4. FORMAT OF TWO COLUMN CASH BOOK

  5. Three Column Cash Book • THREE COLUMN CASH BOOK IS AN EXTENSION OF TWO COLUMN CASH BOOK WHICH COMPRISES THREE ACCOUNTS NAMELY CASH, BANK AND DISCOUNT. FORMAT OF THREE COLUMN CASH BOOK

  6. Terminologies • CONTRA ENTRY IS REFERRED TO ANY TRANSACTION THAT AFFECTS BOTH BANK AND CASH ACCOUNT AT THE SAME TIME E.G • WITHDREW CASH FROM THE BANK FOR OFFICE USE • PAID CASH INTO BANK • BANKED CASH

  7. DISCOUNT IS AN ALLOWANCE OR REBATE GIVEN TO CUSTOMER FOR EITHER PROMPT PAYMENT OR BULK PURCHASES. DISCOUNT IS DIVIDED INTO TWO • CASH DISCOUNT – FOR PROMPT PAYMENT • TRADE DISCOUNT- FOR BULK PURCHASES

  8. RULES GOVERNING FOR DEBITING AND CREDITING THE CASH BOOK • DEBIT BOTH CASH AND CHEQUE RECEIPT • CREDIT BOTH CASH AND CHEQUE PAYMENTS • DEBIT SALES

  9. CREDIT PURCHASES • DEBIT ANY INCOME OR COMMISSION RECEIVED • CREDIT ANY EXPENSE

  10. EXAMPLE 1 • ENTER THE FOLLOWING INTO TWO COLUMN CASH BOOK OF OLA LIMITED • 1/1/12 STARTED BUSINESS WITH CASH #2000 • 2/1/12 PAID WAGES IN CASH 100 • 5/1/12 RECEIVED#1000 CHEQUE FROM SOLA • 20/1/12 CASH SALES PAID DIRECTLY INTO BANK 200 • 31/1/12 PAID ELECTRICITY BY CHEQUE 500

  11. SOLUTIONOLA LIMITED TWO COLUMN CASH BOOK

  12. Tutorial questions • Discount allowed would appear on the (a) debit side of the cash book (b) credit side of the cash book (c) credit side of trading account (d) debit side of the trading account • The bank column in the cash book shows a credit balance of £180. This means (a) a total payment of £180 (b) overdraft of £180 (c) gross profit of £180 (d) leftover of £180 in the bank • A trader set aside from his private fund £1500 for the business purposes. The £1500 is (a) loan (b) capital (c) reserve (d) drawing • ___________ is allowance off invoice (a) trade discount (b) cash discount (c) sales day book (d) discount allowed • Which of the following account is not a prime book (a) cash book (b) purchases day book (c) purchases ledger (d)sales day book

  13. Tutorial questions Bal b/f xx Purchases 1400 Sales 1000 Rent 600 Sola 500 Salaries 1000 Bose 500 bal c/d xx 4000 4000 Bal b/d xx • The balance brought forward is (a) 2000 (b) 3000 (c) 4000 (d) 5000 • The balance carried down is (a) 700 (b)800 (c) 1000 (d) 1200 • The balance brought forward at the beginning of new accounting period is (a) 1000 (b) 1100 (c) 1200 (d) 1300 • A transaction that affects both the cash and the bank account is called (a) double entry (b) contra entry (c) single entry (d) bank entry

  14. Tutorial questions • Drawing appears on the (a) debit side of the cash book (b) credit side of the cash book (c) credit side of trading account (d) debit side of the trading account • A three column cash book contains columns for (a) cash assets and liabilities (b) bank, cash and asset (c) cash, bank and returns (d) discount, cash and bank

  15. Tutorial questions • State the principle of double entry • State five subsidiary books • Defines cash book

  16. Tutorial questions 1. Write up the column cash book from the following • Nov. 1 balance b/f£ • Cash 1,050 • Bank 21,640 • Nov. 2 cash sales 6,050 • Nov.3 took out of the cash till and paid it into the bank • Nov.4 Ola paid us cheque 2000 • Discount 170 • Nov.5 paid cash for stamps 600 • Nov.6 received rates refund by cheque 720

  17. Tutorial questions • Nov.8 bought goods for cash 900 • Nov.12 paid wages in cash 230 • Nov 14 paid motor expenses by cheque 570 • Nov.17we paid shola by cheque 700 • Discount 40 • Nov.19 cash drawing 300 • Nov.20 cash sales 20 • Nov.22 cash purchases 30 • Nov. 23 received loan OLATUNJI by cheque 800 • Nov. 25 banked cash 80 • Nov.30 paid segun by cheque 100 • Discount 80

  18. Thank you • Submit the answer (s) to tutorial questions on the day of resumption in hard copy

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