Preparation of Cash Book
The Cash Book is a fundamental book of original entry that records all cash and bank transactions. It operates on the golden rule of Real Accounts: Debit what comes in, Credit what goes out.
1. The Single Column (Simple) Cash Book
A Single Column Cash Book records only one type of transaction: either Cash or Bank. It functions exactly like a traditional ledger account. It does not record credit transactions or discounts.
💡 Key Rule: The Cash column will always show a Debit balance (or nil) because a business cannot physically pay out more cash than it has received. However, a Bank column can show a Credit balance, which represents a Bank Overdraft.
Step-by-Step Preparation Guide
- Opening Balance: Write the date on the Debit (Dr.) side and record it as
To Balance b/d. (If it is a bank overdraft, record it on the Credit side asBy Balance b/d). - Recording Receipts: For every transaction where money comes in, go to the Debit side. Write the date, "To [Account Name]", and the amount.
- Recording Payments: For every transaction where money goes out, go to the Credit side. Write the date, "By [Account Name]", and the amount.
- Balancing: Total both amount columns. Subtract the smaller total from the larger total. Write the difference on the smaller side as
Balance c/dso both columns match.
Practical Question 1: Single Column (Cash Only)
📝 Question:
Prepare a Single Column Cash Book for the month of May 2026 from the following transactions:
- May 01: Started business with Cash ₹ 1,00,000
- May 03: Bought goods for cash ₹ 20,000
- May 05: Sold goods for cash ₹ 30,000
- May 08: Paid Rent ₹ 5,000
- May 10: Received cash from Rahul (Debtor) ₹ 15,000
- May 15: Paid cash to Sharma (Creditor) ₹ 10,000
- May 20: Withdrew cash from Bank for office use ₹ 8,000
- May 25: Deposited cash into Bank ₹ 12,000
- May 28: Paid salary ₹ 7,000
- May 30: Withdrew cash for personal use (Drawings) ₹ 3,000
Step-by-Step Logic & Explanation
May 01: Started business with Cash ₹ 1,00,000
Analysis: Cash is coming into the business from the owner.
Action: Receipts (Dr.) Side
Entry: Write
To Capital A/c and enter ₹ 1,00,000.
May 03: Bought goods for cash ₹ 20,000
Analysis: The business is buying goods, meaning physical cash is going out.
Action: Payments (Cr.) Side
Entry: Write
By Purchases A/c and enter ₹ 20,000.
May 05: Sold goods for cash ₹ 30,000
Analysis: The business sold goods and received cash in return.
Action: Receipts (Dr.) Side
Entry: Write
To Sales A/c and enter ₹ 30,000.
May 08: Paid Rent ₹ 5,000
Analysis: Rent is an expense. Paying it means cash is going out.
Action: Payments (Cr.) Side
Entry: Write
By Rent A/c and enter ₹ 5,000.
May 10: Received cash from Rahul (Debtor) ₹ 15,000
Analysis: A customer paid what he owed. Cash is coming in.
Action: Receipts (Dr.) Side
Entry: Write
To Rahul's A/c and enter ₹ 15,000.
May 15: Paid cash to Sharma (Creditor) ₹ 10,000
Analysis: Paying off a supplier. Cash is going out.
Action: Payments (Cr.) Side
Entry: Write
By Sharma's A/c and enter ₹ 10,000.
May 20: Withdrew cash from Bank for office use ₹ 8,000
Analysis: Money was taken from the bank and put into the physical cash box at the office. Cash is coming in.
Action: Receipts (Dr.) Side
Entry: Write
To Bank A/c and enter ₹ 8,000.
May 25: Deposited cash into Bank ₹ 12,000
Analysis: Physical cash was taken from the office and put into the bank. Cash is going out of the office.
Action: Payments (Cr.) Side
Entry: Write
By Bank A/c and enter ₹ 12,000.
May 28 & 30: Paid salary (₹ 7,000) & Drawings (₹ 3,000)
Analysis: Both an expense payment and an owner withdrawal mean cash is going out.
Action: Payments (Cr.) Side
Entry: Write
By Salary A/c and By Drawings A/c respectively.
May 31: Balancing the Cash Book
1. Total Receipts (Dr): 1,00,000 + 30,000 + 15,000 + 8,000 = ₹ 1,53,000
2. Total Payments (Cr): 20,000 + 5,000 + 10,000 + 12,000 + 7,000 + 3,000 = ₹ 57,000
3. Find Balance: ₹ 1,53,000 (In) - ₹ 57,000 (Out) = ₹ 96,000 cash remaining.
4. Record Balance: Write
By Balance c/d on the Credit side to make both totals equal ₹ 1,53,000.5. Bring Forward: Write
To Balance b/d for June 01 on the Debit side.Solution: Single Column Cash Book (Cash Column)
| Dr. (Receipts) | Cr. (Payments) | ||||||
|---|---|---|---|---|---|---|---|
| Date (2026) | Particulars | L.F. | Amount (₹) | Date (2026) | Particulars | L.F. | Amount (₹) |
| May 01 | To Capital A/c | 1,00,000 | May 03 | By Purchases A/c | 20,000 | ||
| May 05 | To Sales A/c | 30,000 | May 08 | By Rent A/c | 5,000 | ||
| May 10 | To Rahul's A/c | 15,000 | May 15 | By Sharma's A/c | 10,000 | ||
| May 20 | To Bank A/c (Cash withdrawn) | 8,000 | May 25 | By Bank A/c (Cash deposited) | 12,000 | ||
| May 28 | By Salary A/c | 7,000 | |||||
| May 30 | By Drawings A/c | 3,000 | |||||
| May 31 | By Balance c/d | 96,000 | |||||
| Total | 1,53,000 | Total | 1,53,000 | ||||
| Jun 01 | To Balance b/d | 96,000 | |||||
Practical Question 2: Single Column (Bank Only)
📝 Question:
Prepare a Single Column Cash Book (Bank transactions only) for June 2026. Notice the opening balance is a Bank Overdraft.
- Jun 01: Bank Overdraft balance ₹ 15,000
- Jun 04: Deposited cash into bank ₹ 25,000
- Jun 07: Issued a cheque to supplier Amit ₹ 8,000
- Jun 10: Received a cheque from Priya and deposited it same day ₹ 12,000
- Jun 15: Bank charges directly deducted by the bank ₹ 500
- Jun 18: Interest allowed by bank ₹ 1,000
- Jun 22: Direct deposit by a customer into the bank account ₹ 9,000
- Jun 25: Paid insurance premium by cheque ₹ 3,000
- Jun 30: Withdrew from bank for personal use ₹ 4,000
Solution: Single Column Cash Book (Bank Column)
| Dr. (Receipts) | Cr. (Payments) | ||||||
|---|---|---|---|---|---|---|---|
| Date (2026) | Particulars | L.F. | Amount (₹) | Date (2026) | Particulars | L.F. | Amount (₹) |
| Jun 04 | To Cash A/c | 25,000 | Jun 01 | By Balance b/d (Overdraft) | 15,000 | ||
| Jun 10 | To Priya's A/c | 12,000 | Jun 07 | By Amit's A/c | 8,000 | ||
| Jun 18 | To Interest A/c | 1,000 | Jun 15 | By Bank Charges A/c | 500 | ||
| Jun 22 | To Customer A/c | 9,000 | Jun 25 | By Insurance A/c | 3,000 | ||
| Jun 30 | By Drawings A/c | 4,000 | |||||
| Jun 30 | By Balance c/d | 16,500 | |||||
| Total | 47,000 | Total | 47,000 | ||||
| Jul 01 | To Balance b/d | 16,500 | |||||
PLAY THE FOLLOWING INTERACTIVE GAME NOW. WRITE TRANSACTIONS AND THE SYSTEM WILL PREPARE CASH BOOK FOR YOU
| Dr. (Receipts) | Cr. (Payments) | ||||||
|---|---|---|---|---|---|---|---|
| Date | Particulars | L.F. | Amount (Rs.) | Date | Particulars | L.F. | Amount (Rs.) |
| Enter your first transaction to begin building the book. | |||||||
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