Subsidiary Books: Cash Book MCQs Quiz | Class 9
This quiz is for Class IX students studying Elements of Book-Keeping & Accountancy (Code 254), based on Unit 4: Journal. It covers the introductory concepts of the Cash Book, a subsidiary book for cash and bank transactions. Attempt all 10 questions, submit your answers to check your score, and then download the PDF answer sheet for your records.
Understanding the Cash Book
The Cash Book is a fundamental book of accounts that plays a unique role in book-keeping. It is a special journal that is used for recording all transactions involving cash and bank. Because most business transactions involve cash or bank payments/receipts, maintaining a separate Cash Book simplifies the accounting process significantly.
The Dual Role of a Cash Book
One of the most important features of the Cash Book is its dual nature. It functions as both:
- A Book of Original Entry (Journal): All cash and bank transactions are first recorded chronologically in the Cash Book. This means it serves the purpose of a journal for these specific transactions, and they are not recorded in the main Journal.
- A Book of Final Entry (Ledger): The Cash Book also acts as the Cash Account and the Bank Account. It is balanced periodically, and its balance is directly transferred to the Trial Balance. This eliminates the need to open separate Cash and Bank accounts in the general ledger.
Types of Cash Books
Cash Books can be maintained in different forms depending on the needs of the business. The main types are:
- Single Column Cash Book: This is the simplest form, with only one amount column on each side (Debit and Credit) to record cash transactions. It is essentially a T-account for cash.
- Double Column Cash Book: This type has two amount columns on each side. The common combinations are (a) Cash and Discount columns, or (b) Cash and Bank columns. It allows for recording related transactions together.
- Triple Column Cash Book: This is the most comprehensive type, with three amount columns on each side for Cash, Bank, and Discount. It is widely used by businesses that have a high volume of both cash and bank transactions.
| Feature | Single Column | Double Column (Cash & Bank) | Triple Column |
|---|---|---|---|
| Amount Columns | One (Cash) | Two (Cash, Bank) | Three (Cash, Bank, Discount) |
| Records | Only cash transactions | Cash and Bank transactions | Cash, Bank, and Discount |
| Contra Entries | Not possible | Possible | Possible |
Important Concepts
- Contra Entry: A transaction that affects both cash and bank accounts simultaneously. For example, depositing cash into the bank or withdrawing cash from the bank for office use. Such entries are recorded on both the debit and credit sides of a double or triple column cash book.
- Debit and Credit: All receipts (cash or cheques received) are recorded on the Debit (Dr.) side, and all payments (cash paid or cheques issued) are recorded on the Credit (Cr.) side.
- Balancing: The cash columns are balanced to find the closing cash in hand. The cash account can never have a credit balance. The bank columns are balanced to find the closing bank balance, which can be debit (favorable) or credit (overdraft).
Quick Revision Points
- A Cash Book is a subsidiary book and a principal book.
- Receipts are debited; payments are credited.
- A contra entry is marked with the letter ‘C’ in the Ledger Folio (L.F.) column.
- The discount columns in a cash book are never balanced; they are simply totaled.
- The balance of the cash column always represents an asset and will have a debit balance.
Extra Practice Questions
- Explain why the cash account in a Cash Book can never show a credit balance.
- What is the difference between a cash discount and a trade discount? Which of these is recorded in the Cash Book?
- Give an example of a transaction that would be recorded on the credit side of a double-column cash book (with cash and bank columns).
- Why is it not necessary to open a separate Cash Account in the ledger when a Cash Book is maintained?
- What does a credit balance in the bank column of a Cash Book signify?
