Cash Book | Jamb(UTME) Principles of Accounts

Cash Book (General)

1. A cash book records all cash and bank transactions.
2. It functions as both a journal and ledger.
3. Cash books track both receipts and payments.
4. They provide real-time cash flow updates.
5. Cash books reduce reliance on separate cash accounts.
6. Entries are recorded in chronological order.
7. Cash books assist in cash control and management.
8. Cash books facilitate easy reconciliation with bank statements.
9. Cash books improve financial transparency.
10. They help detect cash discrepancies quickly.
11. Cash books are essential for auditing purposes.
12. They are foundational in small and large businesses.
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Single Column Cash Book

13. Single column cash book records only cash transactions.
14. It contains one money column for cash only.
15. Cash receipts are recorded on the debit side.
16. Cash payments are recorded on the credit side.
17. Single column cash books are suitable for businesses with minimal transactions.
18. There is no column for bank transactions in a single column cash book.
19. It provides a simple method for tracking cash flow.
20. Discounts are not shown in single column cash books.
21. Balances are carried forward regularly in a single column cash book.
22. It is mainly used by small businesses or sole proprietors.
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Double Column Cash Book

23. Double column cash books have columns for both cash and bank.
24. They help record cheque payments and receipts alongside cash.
25. Discount columns are optional in double column cash books.
26. Bank entries appear on both debit and credit sides.
27. It improves accuracy in tracking cash and bank balances.
28. Transfers between cash and bank accounts are easily recorded.
29. Double column cash books streamline reconciliation processes.
30. They capture both physical cash and banking transactions in one book.
31. They aid in understanding liquidity better than single column cash books.
32. Regular balancing is crucial in double column cash books.
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Three Column Cash Book

33. Three column cash books have cash, bank, and discount columns.
34. They record cash transactions, bank transactions, and discounts together.
35. Cash and bank balances are tracked simultaneously.
36. Discounts allowed are recorded on the debit side.
37. Discounts received are recorded on the credit side.
38. Contra entries reflect cash deposits into or withdrawals from the bank.
39. Three column cash books improve financial reporting detail.
40. They reduce the need for separate discount accounts.
41. They provide a clearer picture of company discounts.
42. Three column cash books are ideal for medium to large businesses.
43. They help monitor both liquidity and credit terms efficiency.
44. They simplify auditing cash, bank, and discount activities.
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Discounts (General)

45. Discounts are reductions in price to encourage purchases.
46. They improve customer loyalty and quick payment incentives.
47. Discounts affect both revenue and profitability.
48. Accurate discount recording is vital for financial accuracy.
49. Discounts are recorded differently from allowances.
50. Discounts must be clearly distinguished in financial records.
51. They influence cash flow patterns in a business.
52. Discounts require appropriate documentation and approval.
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Petty Cash Book and Imprest System

53. Petty cash book records minor day-to-day expenses.
54. The imprest system maintains a fixed float of cash.
55. Petty cash is replenished regularly under the imprest system.
56. Petty cash expenses include office supplies and minor transport costs.
57. It helps reduce the burden on the main cash book.
58. The imprest system improves accountability for small expenses.
59. Receipts support entries in the petty cash book.
60. Petty cash prevents overspending through controlled disbursement.
61. It simplifies recording of miscellaneous expenses.
62. Imprest system promotes internal control.
63. Petty cash vouchers authorize payments from petty cash.
64. The imprest system helps in cash flow management for small expenditures.
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Determining the Cash Float

65. Cash float is the initial amount maintained in petty cash.
66. Float amount depends on expected petty cash expenses.
67. Float is replenished to its original level periodically.
68. Analysis of historical petty cash usage helps set the float.
69. Float ensures the business meets small cash needs promptly.
70. Float replenishment should follow company policy.
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Difference between Two- and Three-Column Cash Books

71. Two-column cash books record cash and bank transactions only.
72. Three-column cash books additionally record discounts.
73. Discount columns in three-column cash books show allowed and received discounts.
74. Two-column cash books require separate recording of discounts.
75. Three-column cash books consolidate more data for clarity.
76. Two-column books suit simpler businesses, while three-column suits larger ones.
77. Three-column cash books reduce ledger workload.
78. Three-column books provide better insight into customer payment behavior.
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Difference between Trade and Cash Discounts

79. Trade discounts are reductions for bulk or early purchases.
80. Cash discounts incentivize prompt payment.
81. Trade discounts are not recorded in the books of account.
82. Cash discounts appear in the cash book or discount account.
83. Trade discounts reduce invoice value directly.
84. Cash discounts are granted after invoice issuance.
85. Trade discounts are shown on the invoice but excluded from accounting entries.
86. Cash discounts are recognized in financial statements as expense or income.
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Effects of Trade and Cash Discounts in Books of Accounts

87. Trade discounts simplify invoice values, reducing bookkeeping complexity.
88. Cash discounts reduce the amount payable or receivable.
89. Cash discounts improve liquidity by encouraging prompt payments.
90. Trade discounts impact selling price but not account balances.
91. Cash discounts are posted to discount allowed or received accounts.
92. Proper recording of discounts ensures accurate profit calculation.
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Identifying Various Petty Cash Expenses

93. Office stationery purchases.
94. Minor transportation costs.
95. Postage and courier fees.
96. Refreshments for meetings.
97. Cleaning supplies for office maintenance.
98. Minor repair expenses.
99. Employee reimbursements for small purchases.
100. Local travel allowances.
101. Communication expenses like prepaid mobile recharge.
102. Miscellaneous office sundries.
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Recording Transactions in Two- and Three-Column Cash Books

103. Cash receipts are entered in the debit cash column.
104. Bank deposits are entered in the debit bank column.
105. Payments by cheque are recorded in the credit bank column.
106. Cash payments are recorded in the credit cash column.
107. Discounts allowed are recorded on the debit discount column of the three-column book.
108. Discounts received are recorded on the credit discount column.
109. Contra entries reflect internal cash-to-bank movements.
110. Accurate date entries ensure correct sequencing.
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Final Notes (Summary)

111. Maintaining accurate cash books ensures reliable cash flow analysis.
112. Petty cash books reduce workload on the main cash book.
113. Recording discounts properly prevents revenue distortion.
114. Cash floats keep petty cash functional between replenishments.
115. Single column cash books are simplest, suitable for cash-only transactions.
116. Two-column cash books capture both cash and bank flows.
117. Three-column cash books offer comprehensive transaction details.
118. Trade discounts adjust prices upfront, cash discounts incentivize payment speed.
119. Petty cash expenses should be verified with receipts.
120. Regular balancing of cash books supports financial control.
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