Cash Book - Part 2
"Triple your efficiency with Triple Column Cash Book!"
After learning Single and Double Column Cash Books, we now explore the Triple Column Cash Book and Petty Cash Book.
Triple Column (Three Column) Cash Book
Purpose: Record cash transactions, bank transactions, AND discounts - all in ONE book.
Columns:
- Discount Column (Dr. and Cr. sides)
- Cash Column (Dr. and Cr. sides)
- Bank Column (Dr. and Cr. sides)
Format of Triple Column Cash Book
Dr. Cash Book Cr.
------------------------------------------------------------------------
Date|Particulars|L.F.|Disc.|Cash|Bank||Date|Particulars|L.F.|Disc.|Cash|Bank
----|-----------|----|----|----|----||----|-----------|----|----|----|----|
| | | | | || | | | | |
Example: Triple Column Cash Book
Transactions for January 2024:
- Jan 1: Cash in hand ₹20,000, Cash at bank ₹50,000
- Jan 5: Received from debtor Ramesh ₹9,500 (allowed ₹500 discount)
- Jan 8: Paid to creditor Mohan by cheque ₹7,800 (received ₹200 discount)
- Jan 12: Deposited cash into bank ₹10,000
- Jan 15: Withdrew from bank for office use ₹5,000
- Jan 20: Paid salary by cash ₹8,000
- Jan 25: Received cheque from customer ₹15,000, deposited same day
Triple Column Cash Book:
Dr. Cash Book Cr.
--------------------------------------------------------------------------------
Date|Particulars |L.F.|Disc|Cash |Bank ||Date|Particulars |L.F.|Disc|Cash |Bank
----|---------------|----|----|------|------||----|--------------|----|----|----- |-----
Jan1|To Bal b/d | | |20,000|50,000||Jan8|By Mohan | C | 200| |7,800
Jan5|To Ramesh | | 500| 9,500| ||Jan12|By Bank A/c | C | |10,000|
Jan12|To Cash A/c | C | | |10,000||Jan15|By Cash A/c | C | | 5,000|
Jan15|To Bank A/c | C | | 5,000| ||Jan20|By Salary | | | 8,000|
Jan25|To Customer | | | |15,000||Jan31|By Bal c/d | | |11,500|62,200
----|---------------|----|----|------|------||----|--------------|----|----|----- |-----
|Total | | 500|34,500|75,000|| |Total | | 200|34,500|75,000
================================================================================
Feb1|To Bal b/d | | |11,500|62,200|| | | | | |
Notice "C" in L.F.: Indicates Contra Entry (appears on both sides).
Understanding Contra Entries
Definition: Transactions appearing on BOTH sides of the Cash Book (cash-bank transfers).
Types:
- Cash deposited into bank → Debit Bank, Credit Cash
- Cash withdrawn from bank → Debit Cash, Credit Bank
Why "Contra"?
- Both accounts (Cash and Bank) are in the same book
- No separate ledger posting needed
- Mark with "C" to avoid posting to ledger
Calculation Example
Petty Cash Book
"For the small stuff - tea, stationery, taxis, etc."
Purpose: Record small routine expenses to keep the main Cash Book clean.
Imprest System: Most common method for petty cash.
Imprest System
How it works:
- Fixed amount (e.g., ₹5,000) given to Petty Cashier at month start
- Petty Cashier spends on small items
- At month-end, spent amount is reimbursed
- Next month starts with same ₹5,000
Example:
Step 1: Jan 1 - Petty Cashier receives ₹5,000
Step 2: During Jan - Spends ₹3,500
Step 3: Jan 31 - Receives ₹3,500 reimbursement
Step 4: Feb 1 - Starts with ₹5,000 again
Format of Petty Cash Book
Receipts | Date | Particulars | V.No. | Total | Postage | Stationery | Conveyance | Misc.
---------|------|----------------|-------|-------|---------|------------|------------|-------
5,000 | Jan1 | To Cash | | | | | |
| Jan5 | Postage stamps | 1 | 200 | 200 | | |
| Jan8 | Pens & Papers | 2 | 150 | | 150 | |
| Jan12| Auto fare | 3 | 80 | | | 80 |
| Jan31| Balance c/d | | 4,570 | | | |
---------|------|----------------|-------|-------|---------|------------|------------|-------
5,000 | | | | 5,000 | 200 | 150 | 80 | (570)
Month-End:
- Total spent = ₹200 + ₹150 + ₹80 = ₹430
- Reimbursement = ₹430
- Next month imprest = ₹5,000
Real-World Case Study
📋 Case Study: Tata Consultancy Services - Petty Cash Management
❗ Scenario:
TCS has 50+ office locations in India. Each office has petty cash for daily expenses like courier, refreshments, local travel, office supplies. Managing thousands of small transactions centrally was chaotic.
💡 Analysis:
Implemented Imprest System with: (1) Each office Petty Cashier gets ₹20,000/month, (2) Digital Petty Cash Book with photo receipts, (3) Weekly reimbursement via ERP, (4) Auto-classification into expense heads (Stationery, Travel, etc.)
✅ Outcome:
95% reduction in petty cash handling time for finance team, complete audit trail, monthly petty expenses reduced by 22% due to better tracking, and instant expense reports for management.
Advantages of Petty Cash Book
Note
Why Use Petty Cash Book?
- Division of Labor: Main cashier focuses on big transactions
- Main Cash Book stays clean: No clutter of small items
- Saves Time: Petty Cashier handles routine expenses
- Better Control: Fixed imprest amount prevents overspending
- Easy Analysis: Columnar format shows category-wise expenses
Comparison: Cash Book Types
| Type | Columns | Records | Best For |
|---|---|---|---|
| Single Column | Cash only | Cash transactions | Small businesses (no bank) |
| Double Column | Cash + Discount | Cash + Discounts | Businesses with credit sales/purchases |
| Triple Column | Cash + Bank + Discount | Cash, Bank, Discounts | Medium/large businesses |
| Petty Cash Book | Receipts + Multiple expense heads | Small routine expenses | All businesses (division of work) |
Exam Tips
Common Question: "Pass journal entry when petty cash is reimbursed."
Answer:
Petty Cash A/c Dr. ₹3,500
To Cash A/c ₹3,500
(Being petty cash reimbursed)
Quiz: Cash Book Part 2
Test Your Knowledge
Question 1 of 5
1. In Triple Column Cash Book, contra entry is marked with: