C2 - section 6 - The cash book.

Question 1

Cash book definition

Answer 1

a cash book is a record of cash receipts and payments that can form part of the double entry bookkeeping system as well as being a book of prime entry.

Question 2

What are the main variations of cash books?

Answer 2

there are 3 main types of cash books:
two column
three column

Question 3

How are two column cash books generally laid out?

Answer 3

They are split into two identical sides, T account layout.
They include:
Date
Narrative
Cash (total) - physical cash
Bank (total) - debit/credit card transactions, cheques.

Question 4

Which side of the cash book would increase the value in a two column cash book?

Answer 4

The left hand side is debits and records money paid in. The right hand side is credits and represents money paid out.

Question 5

What is the difference between a two column and three column cash book?

Answer 5

in a three column cash book, it also has a discount column, and has the discounts dealt with in conjunction with the cash book.

Question 6

Why may a company have two cash books?

Answer 6

Some companies separate the books into a payment received cash book and payments made cash book.