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Institute of Southern Punjab Multan: Southern Business School (SBS)

The document discusses the concepts of cash book and petty cash. It explains that the cash book is used to record all cash receipts and payments, and works as both a book of original entry and a ledger account. It also describes the different types of cash books that are commonly used. The document then defines petty cash book as a book used to record small everyday cash expenses, with a separate column for each expense type. The difference between total debits and credits represents the petty cash balance on hand.

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mudasir rasheed
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37 views3 pages

Institute of Southern Punjab Multan: Southern Business School (SBS)

The document discusses the concepts of cash book and petty cash. It explains that the cash book is used to record all cash receipts and payments, and works as both a book of original entry and a ledger account. It also describes the different types of cash books that are commonly used. The document then defines petty cash book as a book used to record small everyday cash expenses, with a separate column for each expense type. The difference between total debits and credits represents the petty cash balance on hand.

Uploaded by

mudasir rasheed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Southern Business School (SBS)

Institute of Southern Punjab Multan

Assignment No: 8

Due Date: 23-6-20

Class: BBA 3rd Semester

Section: A

Subject: Financial Accounting

Student Name: Muhammad Rizwan

Complete Registration No: BBA-021R19-5

Submitted To: Mam Sonia Hassan


Explain the concept of cash book and petty cash?

Cash book:

The cash book is used to record receipts and payments of cash It works as a book
of original entry as well as a ledger account The entries related to receipt and
payment of cash are first recorded in the cash book and then posted to the relevant
ledger accounts Moreover a cash book is a substitute for cash account in the
ledger A company that properly maintains a cash book does not need to open a
cash account in its ledger

Types of cash book:

There are four major types of cash book that companies usually maintain to
account for their cash flows these are given below.

 A double/two column cash book to record cash as well as bank transactions.


 A triple/three column cash book to record cash bank and purchase discount
and sales discount.
 A petty cash book to record small day to day cash expenditures.
 A single column cash book to record only cash transactions.

Petty Cash Book:

Petty Cash Book is maintained to record small expenses such as postage


stationery telegram .A separate column is allotted for each type of expenditure
The difference between the total of the debit items and that of the total column
on the credit represents the balance of the petty cash in hand.

Explanation:

Generally in all business houses payments are made by cheque for battery control
over cash But the payment of small expenditures like stationery traveling postage
telegrams office teas and newspapers by cheque are impartial Besides the above
mentioned problem the chief cashier of a larger business has to deal with
numerous transactions of large amount daily If the chief cashier records petty
expenses in main cash book then chief cashier and main cash both will be
overburdened.To solve these problems the chief cashier delegates responsibilities
to some senior staff member for day to day small transactions For this purpose
he is given a small amount and a separate book to record these small payments
The book in which these small payments are recorded is called Petty Cash Book
The found that is used for small payments is known as Petty Cash and the person
who is responsible for makings small payment and recording them is called Petty
Cashier

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