A cash book is a book of account in which all cash receipts and cash payments of a business are recorded. It serves as both a book of original entry (where transactions are first recorded) and a ledger account for the cash element. In simple terms, whenever money comes into the business (cash in hand) or goes out (cash payments), the transaction is entered in the cash book.

1. It helps you to know at any point in time how much cash is on hand or in the bank.


2. It helps you to reduce time and labour because transactions are recorded directly, instead of posting many transactions first into journals and then into ledger accounts.


3. It helps you to provide a check on errors and fraud because the balance of the cash book can be verified with the actual cash in hand.


4. It helps you to support good management of cash flow and to assist in making sound business decisions.

When maintaining a cash book, the following items or columns are usually present:

1. Date: The date of the transaction.


2. Particulars (Description): Description of the transaction, showing who paid or received the money and for what purpose.


3. Folio (F): Page number or reference to the ledger or journal.


4. Amount Columns: Depending on the type of cash book, there may be one or more columns for amounts. A single column version has one money column; a double column has two (cash and bank); a three-column has three (cash, bank, and discount).


5. Balance Column: Some formats include a column for the running balance of cash or bank.


6. Debit Side (Left): Where cash receipts are recorded.


7. Credit Side (Right): Where cash payments are recorded.

There are three main types of cash book:

1. Single Column (One-Column) Cash Book: This type has only one amount column on each of the debit and credit sides, and it records only cash receipts and cash payments (cash in hand).


2. Double Column (Two-Column) Cash Book: This type has two money columns on each side of the book: one for cash and one for bank. It records both cash transactions and bank transactions (cash deposits and withdrawals).


3. Three Column (Three-Column) Cash Book: This has three amount columns on each side: typically cash, bank, and discount (either discount allowed or discount received). It is useful for businesses that frequently deal with discounts as well as cash and bank transactions.

1. Record all cash receipts on the debit (left) side of the cash book.


2. Record all cash payments on the credit (right) side of the cash book.


3. Enter the name of the payer or payee in the Particulars column so that the transaction is clearly identified.


4. Balance the cash book at regular intervals by totaling both sides and finding the difference to show the cash in hand or bank balance.


5. For bank transactions, when money is paid into the bank, record it in the bank column; when money is withdrawn, record it in the bank column.


6. In a three-column cash book, record discounts given or taken in the discount column.

Basic layout for a single column cash book (Dr and Cr):

At the end of the period, both sides are totaled and the balance is shown. For a double column type, there will be additional columns for bank transactions. For a three-column type, there will be columns for cash, bank, and discount on each side.

In a cash book with a bank column (double or three-column), there may be contra entries which represent transactions affecting both cash in hand and bank. Examples include depositing cash into the bank or withdrawing cash from the bank.

1. When cash is deposited into the bank, record the transaction in both the cash and bank columns appropriately.


2. When cash is withdrawn from the bank, record the transaction in both the bank and cash columns appropriately.

These entries are often marked with the letter C in the folio column to show that they are contra entries.

1. The cash book records all major cash and bank transactions of a business.


2. The petty cash book records minor cash payments such as transport fares, postage, or refreshments.


3. The petty cash book usually operates under the imprest system, where a fixed amount is given to a petty cashier and replenished when spent.


4. The cash book may record both cash in hand and bank transactions, while the petty cash book deals only with small cash payments.

1. It helps you to save time because cash transactions are recorded directly in the cash book instead of passing through several books.


2. It helps you to know the cash and bank balance at any time, which supports financial control.


3. It helps you to detect errors and to prevent fraud, as balances can be checked against actual cash and bank statements.


4. It helps you to provide a continuous and reliable record of all cash transactions.


5. It helps you to make better financial decisions as a business owner.

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Single Column Cash Book Example

Illustration / Question:

Enter the following transactions in the single column cash book of XYZ Enterprises for November 2025:

Date	Details	Amount (₦)
Nov 1	Cash in hand (opening balance)	50,000
Nov 3	Cash sales	30,000
Nov 5	Paid rent	10,000
Nov 6	Received from A. John	15,000
Nov 7	Paid wages	8,000
Nov 10	Purchased stationery	5,000

Solution / Cash Book:

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Double Column Cash Book Example

Illustration / Question:

Record the following transactions in the double column cash book (Cash & Bank) for ABC Traders in December 2025:

Date	Details	Cash (₦)	Bank (₦)
Dec 1	Cash in hand	40,000
Dec 2	Cash sales	35,000
Dec 3	Bank deposit of cash		30,000
Dec 5	Paid rent in cash	5,000
Dec 8	Paid supplier by bank cheque		20,000
Dec 10	Withdrawn from bank for office use	10,000

Solution / Cash Book:

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Three Column Cash Book

Illustration / Question:

Prepare a three column cash book (Cash, Bank, Discount) for DEF Enterprises for January 2026 using the following transactions:

Date	Details	Cash (₦)	Bank (₦)	Discount (₦)
Jan 1	Cash in hand (opening)	50,000
Jan 2	Cash sales	30,000
Jan 3	Bank deposit		20,000
Jan 4	Received from A. John (discount received)		15,000	500
Jan 5	Paid rent	10,000
Jan 7	Paid supplier – discount allowed			1,500
Jan 10	Paid wages	8,000

Solution / Cash Book:

Summary

A cash book is a vital accounting record where all cash receipts and payments are entered. It serves as both a ledger account and a book of original entry. There are three main types of cash books: single column, double column, and three column. Properly recording transactions, balancing the book regularly, and understanding contra entries are important for accuracy. While the cash book handles major transactions, the petty cash book records smaller, routine expenses. Keeping an accurate cash book promotes transparency, accountability, and sound financial management in a business.

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Revision Questions

1. Define a cash book.


2. List and explain the three types of cash book.


3. State the rules for recording transactions in a cash book.


4. What is a contra entry? Give an example.


5. Differentiate between a cash book and a petty cash book.


6. State three advantages of maintaining a cash book.


7. Prepare a double-column cash book from the following transactions for the month of January.