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Ca h Book

Ca h Book. What’s on the menu?. Difference between the cash and bank account Advantages of the cash book 2-column Cash Book Contra Entries Posting entries in cash book to ledger accounts. Cash?? Bank??. What did you do with the money?.

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Ca h Book

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  1. Ca h Book

  2. What’s on the menu? • Difference between the cash and bank account • Advantages of the cash book • 2-column Cash Book • Contra Entries • Posting entries in cash book to ledger accounts

  3. Cash?? Bank?? • What did you do with the money? • How much ‘ang pow’ money did you receive from the last Chinese New year? • How much are you left with? Now let us try to record the transactions in the cash and bank accounts on the board.

  4. Cash?? Bank?? • Cash Account • Involves money kept in the office • Usually small amount of money involved • Bank Account • The rest of money NOT in cash account • Kept in current account of bank (not in fixed deposit account)

  5. Cash Account and Bank Account • How are they similar? • Both are assets • An increase Dr • A decrease  Cr • An inflow of cash = increase of assets  debit • An outflow of cash = decrease of assets  credit

  6. Ca$h Book? • What is a cash book? • The cash book consists of both the cash and bank accounts. • There is no need to maintain separate cash and bank accounts.

  7. Dr (IN) 2 – column Cash Book Cr (OUT) Date Particulars Cash Bank Date Particulars Cash Bank 2 – column Ca$h Book

  8. Date Particulars Cash Date Particulars Cash Cash account Date Particulars $ Date Particulars $ Bank account Date Particulars $ Date Particulars $ Bank Bank 2 – column Ca$h Book

  9. Ca$h Book? • Cash book as a book of original entry? • Information from source documents are recorded directly into the ca$h book • What are the source documents? • Receipts • Cash till slips • Payment vouchers • Counterfoils of cheques

  10. Source Documents Taken from page 114 – 115 of TB Receipt Counterfoil Cash till slip Cheque

  11. Source Documents Taken from page 114 – 115 of TB Paying-in slip

  12. Source Documents Taken from page 114 – 115 of TB Payment voucher

  13. Advantages of a Ca$h Book • Reduces the number of entries in the ledger • All ca$h entries are recorded in ca$h book. • So ledger does NOT include any ca$h entries at all • The number of accounts in the ledger is reduced • Higher efficiency • One person can take charge of the ca$h book • Easier reference to the Cash and Bank account • Both accounts are found in the Ca$h book • All money received and paid on a particular date are recorded on the same page instead of on different pages in the ledger.

  14. 2 – column Ca$h Book • Therefore, the cash book is like a journal and ledger. • Why? • Journal - information from the source document is recorded • directly into it • Ledger – the cash and bank accounts are not found • in the ledger books at all

  15. Exercise 1 • Now, let’s try to record some entries into OUR ca$h book • On April 2, you received • A birthday gift $500 in the form of cheque from Mum and Dad • A birthday gift $100 cash from Aunty Mary • A birthday gift $40 cash from Cousin Lily

  16. Exercise 1 • On April 2, you paid • $200 in cheque for expenses incurred for holding birthday party at Hard Rock Café • Cash $10 for food bought for grandma who was unable to attend your party • Donate a $40 cheque to National Kidney Foundation (NKF) as a good deed.

  17. Dr (IN) Two-column Cash Book Cr (OUT) Date Particulars Cash Bank Date Particulars Cash Bank $ $ $ $ 2002 2002 Apr 2 Birthday Gift - Parents 500 Apr 2 Party 200 Birthday Gift – Aunty Mary 100 Grandma’s food 10 NKF 40 Birthday Gift – Cousin Lily 40

  18. Contra Entry • What is a contra entry? • To record the following transactions • When money from the bank is taken out for office use • When money from the office is put into the bank

  19. 2002 May 2 $100 is withdrawn from the bank for office use May 25 $250 from the office is paid into the bank Dr (IN) Two- column Cash Book Cr (OUT) Cash Cash Bank Date Particulars Bank Date Particulars $ $ $ $ 2002 2002 May 2 Bank 100 May 2 Cash 100 25 Bank 250 25 Cash 250

  20. Now, let’s try a question Pair with the partner next to you Post the entries on worksheet 1

  21. Dr (IN) 2 – column Cash Book Date Particulars Cash Bank Date Particulars Cash Bank Posting to ledgers Cr (OUT) 2002 $ $ 2002 $ $ Jan 1 Balance b/d 100 850 Jan 7 Purchases 50 5 Ken 150 20 Stationery 35 18 Sales 120

  22. Date Purchases Date $ $ Date Particulars Particulars Posting to ledgers Ken Particulars $ Date Particulars $ 2002 Jan 5 Bank 150 2002 Jan 7 Cash 50

  23. Sales $ Date Particulars $ Date Particulars Stationery Date $ $ Date Particulars Particulars Posting to ledgers 2002 Jan 18 Cash 120 2002 Jan 20 Cash 35

  24. Posting to ledgers Based on the cash book prepared for worksheet 1, do the posting to the appropriate ledgers.

  25. So, what have I learnt? • Difference between the cash and bank account • Advantages of the cash book • 2-column Cash Book • Contra Entries • Posting to ledgers

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