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Check out Cash Book with Discount Column Homework Answers Here

Cash book is a part of general ledger from accounting point of view. The entries into the cash book are posted in the general ledger. It is a financial journal with all cash receipts and payments including bank deposits and withdrawals.

All cash transactions are primarily recorded in the book with narration so one can say that it is journal. Cash book can also be considered as ledger as it serves the purpose of both cash and bank account.

Cash book is a ledger to keep track of small purchases in small and medium size organization. Small businesses just food joints and small restaurants keep a book as they purchase supplies in small quantities to avoid short term shortfalls in supplies.

Cash book uses

Cash book is very convenient form of accounting to record small purchase. Cash book is used because many times it is inconvenient to make provision of payment through check or credit card. Besides this lot business prefer to make the transactions in cash only.

Bookkeeping

There is specific method to carry recording of transactions in this book. All legitimate expenses of materials and supplies in small quantity are recorded in this book. As these are legitimate transaction on needs the transfer them as well as residual balances to general ledger in order claim them as deductions. On needs to also record money withdrawn from the bank for such small transactions in banking ledger. Make it a point to reconcile the balances at the end of regular intervals or monthly basis.

If one needs details of bookkeeping of the book transactions then one needs to check out cash book with discount column homework answers

Types of cash books

The book with cash column and discount column is known as double column cash book. There are two types of book. Double column cash book and triple column cash book. Triple column cash also includes bank account column. In cash book credit and debit sides are separated by 2 columns known as cash column and discount column.

If you wish to know more about cash book with discount column check out cash book with discount column homework answers.

Discount Received and discount allowed

In a company’s cash book section discount received and discount allowed are recorded as cash discount which is represented in the additional discount column. Generally such transaction materializes at the time when a customer makes a payment in receipt of goods or services. Such discounts are recorded as credit transactions. Such recording of transactions occur because of market competition. Such discounts are used by sellers as rebates and discounts to encourage customers once their goods and services are taken on credit. Such discounts encourage buyers to make an early payment.

If you need any further information on such transactions check out cash book with discount column homework answers.

If a customer makes an early payment they are allowed a discount. You can find such discounts recorded on the debit side of the cash book. This is done as expenses are deducted for hike in amount. Discount is termed as an expense in accounting aspects as it is given by companies for payments they receive on transactions with external parties. It is also a benefit for those parties as they pay less due that discounted amount.

If you need to know how the transactions can recorded for discount received and discount allowed then check out cash book with discount column homework answers.

Discount allowed is not balanced actually it is transferred to profit and loss account.

The amount received after discount is imposed is represented in cash book on the credit side

Trade Discount

We know that double column cash book is provided with discount column on both credit and debit side. But many times buyers purchase goods on credit and discount is given to encourage timely payment such discounts are known as trade discount.

Check out cash book with discount column homework answers to know the treatment of discounts in cash book.

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Discount allowed to debtors and discount received from creditors

Discount allowed to debtors is recorded on the debit side of cash book and discount received from creditors is recorded on credit side of cash book.

Recording Cashbook transactions in ledger

It is the responsibility of the accounting staff of a company to regularly compare cash book with bank statements preferably on monthly basis. Cash book transactions so recorded should appropriately transferred to the proper accounts or headings in the general ledger.

Cash book issues

Which transactions to consider in cash book is a dicey thing. Employees who are authorized to make payment either by check or credit card may find it inconvenient to handle cash unless and until it is a minuscule amount. Sometimes cash is not convenient if one has purchase from wholesale market.

A knowledgeable person in subject of accounting would agree that different experts have different perceptions about treatment of accounting of cash book and in businesses both auditors and accounting staff of the company need to come in agreement on dealing with cash book transactions and its bookkeeping and accounting treatment.

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