Cash Book Questions and Answers [With PDF]

The cash book is one of the busiest books in any business, because cash and bank transactions happen every day. Questions on its types, formats and a full cash book problem appear in almost every exam. Here are 30 important questions with clear answers, ready-made formats and a worked treble column cash book with checked totals.

This is Chapter 8 of our Accounting course. It follows Ledger.

Meaning and Types of Cash Book

Q1. What is a cash book?

The cash book is a special journal that records all cash receipts and cash payments of a business. Receipts are written on the debit (left) side and payments on the credit (right) side.

Q2. What are the features of a cash book?

• It has a fixed format with a debit side for receipts and a credit side for payments.
• Transactions are recorded in date order.
• It is a book of original entry and also a ledger for the cash account.
• The cash balance is found by subtracting total payments from total receipts.
• It reduces the chance of theft, forgery and recording mistakes.
• It helps the owner control the cash of the business.

Q3. What is the importance of a cash book?

• It shows total cash received, total cash paid and the balance on any date.
• It shows whether there is enough cash to pay creditors and expenses.
• The book balance can be compared with the actual cash in hand to find errors or theft.
• Bank transactions and the bank balance can be tracked in the same book when a bank column is used.

Q4. Why is the cash book both a journal and a ledger?

Q5. How is the cash book classified?

• Single column cash book: cash column only.
• Double column cash book: cash and bank columns.
• Treble (three) column cash book: cash, bank and discount columns.
• Petty cash book: for small day-to-day expenses.

Large firms may also keep separate cash receipts and cash payments journals.

Single Column Cash Book

Q6. What is a single column cash book?

It has one amount column on each side, for cash only. Small businesses that deal mostly in cash and have little bank activity use it.

Q7. What is the format of a single column cash book?

Q8. How do you write a cash book?

• Date: the date of each cash transaction.
• Particulars: on the debit side, the source of the cash received. On the credit side, what the cash was paid for.
• Receipt or voucher number: the number of the document that proves the transaction.
• L.F.: the ledger page of the account to which the entry is posted.
• Amount: the amount, on the correct side.

Double Column Cash Book

Q9. What is a double column cash book?

A cash book with two amount columns on each side: cash and bank. It is used by businesses that handle both cash and bank transactions.

Q10. What are its advantages?

• It shows both the cash balance and the bank balance in one place.
• It saves the effort of keeping a separate bank account in the ledger.
• It is more informative than the single column cash book.

Q11. What is the format of a double column cash book?

Q12. What is a contra entry?

A contra entry is a transaction that affects both the cash and bank columns, so both its debit and credit are in the same cash book. Examples: depositing cash into the bank (bank column debited, cash column credited) and withdrawing cash from the bank for office use (cash column debited, bank column credited). The letter C is written in the L.F. column on both sides, and no ledger posting is needed.

Treble Column Cash Book and Discount

Q13. What is a treble column cash book?

A cash book with three amount columns on each side: discount, cash and bank. The debit side’s discount column records discount allowed to customers, and the credit side’s discount column records discount received from suppliers.

Q14. What are its advantages?

• It saves time and effort, because discount items do not need separate journal entries.
• Cash and bank balances are easy to find.
• Total discount allowed and discount received are easy to find.

Q15. What is a cash discount, and how is it different from a trade discount?

Q16. What is the format of a treble column cash book?

Related Terms

Q17. What is a cash receipts journal?

A special journal that records all cash and cheques received, usually with columns that show the source of each receipt.

Q18. What is a cash payments journal?

A special journal that records all cash and cheques paid, usually with columns that show what each payment was for.

Q19. What is a cash account?

The account in which cash receipts and payments are recorded. When a cash book is kept, the cash book itself is the cash account, so no separate cash account is opened in the ledger.

Q20. What is a cash balance?

The difference between total cash receipts and total cash payments on a particular date. It is always a debit balance, because a business cannot pay out more cash than it has.

Q21. What is a cash voucher?

A document, such as a cash memo, bill or receipt, that proves a cash transaction took place. Entries in the cash book are made on the basis of vouchers.

Q22. What does a credit balance in the bank column mean?

A bank overdraft. The business has taken out more money than it deposited, so it owes the bank. A debit balance in the bank column means money is available in the bank.

Petty Cash Book

Q23. What is a petty cash book?

A book kept by the petty cashier to record small day-to-day expenses, such as postage, stationery, tea and local transport. The petty cashier receives money from the head cashier and records each small payment.

Q24. What are the advantages of a petty cash book?

• It saves the head cashier’s time.
• It keeps small expenses out of the main cash book, which makes it cleaner.
• It makes checking easier, because expenses are grouped under heads.
• It lowers the chance of petty fraud.

Q25. What are the types of petty cash books?

• Columnar (analytical) petty cash book
• Imprest petty cash book

Q26. What is a columnar petty cash book?

A petty cash book that records money received from the head cashier on the debit side, and the payments on the credit side in separate columns for each kind of expense, such as stationery, postage and travel. The totals of those columns are posted to the ledger.

Q27. What is the imprest system of petty cash?

Under the imprest system, the head cashier gives the petty cashier a fixed amount (the imprest) at the start of a period. At the end of the period, the petty cashier submits the vouchers, and the head cashier pays back exactly the amount spent, which restores the fund to its original size. The amount spent can never exceed the amount received.

Example: The imprest is 5,000. By the end of the month the petty cashier has spent 3,800 and holds 1,200. The head cashier pays 3,800, so the petty cashier starts the next month with 5,000 again.

Q28. What are the advantages of the imprest system?

• It saves time and labour.
• The head cashier controls petty spending, because the fund is fixed.
• Arithmetical accuracy is easy to check.
• The petty cashier can work comfortably without asking for money repeatedly.
• It prevents misuse of funds.

Q29. What is the format of a petty cash book?

Worked Example

Q30. How do you prepare a treble column cash book?

The following transactions took place in David’s business in January 2026:

• Jan 1: Cash in hand 15,000. Bank overdraft 3,000.
• Jan 4: Deposited 3,000 cash in the bank.
• Jan 5: Received 3,400 cash from Smith in full settlement of a debt of 3,500.
• Jan 10: Paid Williams by cheque 4,800 and received a discount of 200.
• Jan 14: Withdrew 600 cash for personal use.
• Jan 17: Sold goods for cash 13,000.
• Jan 18: Bought goods worth 10,000 at a 10% trade discount and paid cash.
• Jan 20: Paid notes payable 1,500 through the bank.
• Jan 25: Received a cheque from Pollard for 7,700 after allowing discount of 300, and deposited it.
• Jan 31: Interest charged by the bank 500.

Assumptions: the Jan 18 purchase is paid in cash at the net price of 9,000 (10,000 less 10%), and the Pollard cheque is banked the same day. Smith’s discount is 3,500 – 3,400 = 100.

Check: Cash receipts 31,400 = payments 12,600 + balance 18,800. Bank receipts 10,700 = payments 9,800 (including the opening overdraft of 3,000) + balance 900. The bank column therefore ends with a debit balance of 900. The discount columns are not balanced against each other: their totals are transferred to the Discount Allowed account (debit 400) and the Discount Received account (credit 200).

Quick Revision Points

• Receipts go on the debit side. Payments go on the credit side.
• Single column: cash. Double: cash and bank. Treble: discount, cash and bank.
• Contra entry: both sides in the same cash book, marked C. No ledger posting.
• Debit side discount column is discount allowed. Credit side is discount received.
• A credit balance in the bank column is an overdraft. Imprest = a fixed petty cash fund.

Test yourself with the chapter quiz below, then move on to Trial Balance.