Had the cash receipt journal recorded other items such cash sales, fixed asset sales etc. then the credit would have gone to the appropriate sales or fixed asset disposal account. A cash book will detail all cash receipt and payment transactions for a business in chronological order, but can also include bank account transactions, which we’ll explain further below. In addition to detailing cash and bank transactions, a triple-column or three-column cash book shows additional information about sale and purchase discounts. It is mostly used by firms that avail of massive cash discounts. Maintaining detailed records of your firm’s cash transactions in a cash book is extremely vital. In addition to serving as an important accounting record, it helps companies in keeping track of their financial position at all times.

• The cash book is updated from original accounting source documents, and is therefore a book of prime entry and as such, can be classified as a special journal.
• The financial and geopolitical stakes have never been higher.
• In addition to serving as an important accounting record, it helps companies in keeping track of their financial position at all times.
• In the description column, the accountant writes a short description or narration of the transaction.

Then, the three-column cash book is the most detailed and comprehensive. It comprises three columns, each on the debit and credit side. One column has cash transactions, the second records bank transactions, and the third has transactions relating cash book journal to discounts allowed and received. Three are needed for discounts received and paid, cash transactions, and bank transactions. Three-column cash books (or triple-column cash books ) have three money columns on the debit and credit sides.

How a Cash Book Works

All cash transactions during an accounting period are made in chronological order and recorded in it. The main goal of a cash book is to manage cash efficiently and make it easier to determine cash balances at any point. Managers and company accountants can budget their cash efficiently when this goal is accomplished. Also, it is faster to get cash information in a cash book than by following the cash through a ledger.

The three common types of cash books are single-column, double-column, and triple-column. Because the voucher is a notional account, the reduction given is recorded on the debit column of the cash journal, whereas the reduction received is recorded on the credit column. The two columns are matched at the financial year-end, and the ending amounts are shifted accordingly. As a result, in this cash book which is also referred to as a two-column cash book, collecting payments and debits are documented on one side, while coupons earned and given are documented in the other column. Larger companies might choose to divide their cash book into two separate journals – a cash receipt book and a cash disbursement book. A cash disbursement book details all payments made to vendors, and the cash receipt book displays all payments made to the business.