Simple Cash Book: Recording transactions MCQs Quiz | Class 9
This quiz is for Class IX students studying Elements of Book-Keeping & Accountancy (Code 254), focusing on Unit 6: Recording and Posting of Cash Transactions. It covers key topics like recording cash receipts and payments in a Simple Cash Book. Contra items are not applicable here and are excluded. Answer all questions, submit your quiz, and then download your personalized answer sheet PDF.
Understanding the Simple Cash Book
The Simple Cash Book, also known as a Single-Column Cash Book, is a fundamental book of accounts used to record all cash transactions of a business. It functions as both a book of prime entry (a journal) and a ledger account. All cash receipts are recorded on the debit side, and all cash payments are recorded on the credit side. The balance of the cash book represents the cash in hand.
Key Concepts of the Simple Cash Book
1. Cash Receipts
Cash receipts are inflows of cash into the business. Whenever the business receives cash, it is recorded on the debit (Dr.) side of the Simple Cash Book. The principle is “Debit what comes in.”
- Sale of goods for cash
- Cash received from debtors
- Capital introduced in cash
- Loan received in cash
- Income received (e.g., rent, commission, interest)
2. Cash Payments
Cash payments are outflows of cash from the business. Whenever the business pays cash, it is recorded on the credit (Cr.) side of the Simple Cash Book. The principle is “Credit what goes out.”
- Purchase of goods for cash
- Payment of expenses (e.g., salaries, rent, wages)
- Purchase of assets for cash (e.g., furniture, machinery)
- Cash paid to creditors
- Drawings in cash by the owner
3. Why Contra Entries are Not Applicable
A contra entry is a transaction that involves both the cash and bank accounts. For example, depositing cash into the bank or withdrawing cash from the bank for office use. Since a Simple Cash Book only has one ‘Amount’ column for cash transactions, it cannot record transactions involving a bank account. Contra entries are only possible in a Double-Column or Triple-Column Cash Book, which has separate columns for cash and bank.
Format of a Simple Cash Book
A Simple Cash Book has two identical sides: a debit (receipts) side on the left and a credit (payments) side on the right.
| Date | Particulars | L.F. | Amount | Date | Particulars | L.F. | Amount |
|---|---|---|---|---|---|---|---|
| To Opening Balance b/d | (Value) | By Expense A/c | (Value) | ||||
| To Sales A/c | (Value) | By Purchases A/c | (Value) |
Quick Revision Points
- A Simple Cash Book only records cash transactions.
- It does not record credit transactions, bank transactions, or discounts.
- The debit side records all cash receipts.
- The credit side records all cash payments.
- The cash book can never have a credit balance because you cannot pay more cash than you have.
- It serves the dual purpose of a journal and a ledger (the Cash Account).
- Balancing is done by subtracting the total of the credit side from the total of the debit side to find the closing cash balance.
Extra Practice Questions
- If the total of the debit side of a cash book is Rs. 10,000 and the total of the credit side is Rs. 6,000, what is the closing balance?
- Payment of salary by cheque would be recorded in which book of accounts?
- Goods worth Rs. 5,000 were sold to Rohan on credit. How will this be recorded in the Simple Cash Book?
- What does the term ‘L.F.’ stand for in the cash book format?
- Is depreciation of machinery recorded in the Simple Cash Book? Why or why not?
