Page 54 - Book-keeping for Secondary Schools Student’s Book Form One
P. 54
Book-Keeping for Secondary Schools
Purchase returns daybook (purchase A cash book is a financial record used
returns journal) to track cash and bank transactions in
The purchase returns daybook is used to a business or enterprise. It serves as a
record transactions related to purchase primary accounting register for cash
returns, or return of goods to suppliers receipts and cash payments. The cash
who supplied goods on credit (creditors). book records all inflows and outflows of
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Each entry made include details of the cash, providing a complete and up-to-date
record of the enterprise's cash position.
goods and the credit note, the name The cash book can be maintained in both
of supplier (creditor) and the amount manual and electronic formats. In manual
involved as well as the reason of returning systems, it is often a physical book where
the goods. transactions are recorded by hand, whereas
Cash book in electronic systems, it is a digital record
The cash book is used to record within a specific accounting software or
transactions related to receipt and any electronic spreadsheet. A cash book
payment of cash as well as money placed can take different forms ranging from
into the bank (bank deposits) and those single column cash book, two column
taken from the bank (bank withdrawals). cash book, three column cash book and
petty cash book. For the purpose of this
A cash book is a book of prime entry book, the focus will be on single column
used to record transactions that involve cash book.
movement of cash, that is receiving or Single column cash book
paying cash by the business. Since cash is This cash book has a single column used to
an asset for the business, receipts of cash record all cash or bank transactions. Cash
are recorded by a debit entry in the cash receipts, such as sales or loans received,
book (increase in assets), and payment are recorded on the debit side (left hand
of cash is recorded by a credit entry in side) of the book. While cash payments,
the cash book (decrease in asset). The such as expenses or loan repayments, are
cash book has a unique characteristic recorded on the credit side (right hand
because, apart from being classified as side) of the book.
a book of prime entry, it also forms part
of a general ledger. This is because some General journal (journal proper)
small businesses that operate strictly on This book of prime entry is used to record
cash basis find it easy to skip journals and transactions related to other items, which
instead, enter all transactions (receipts according to their nature are not recorded
and payments) in the cash book. For in any of the books of prime entry. It is
such businesses, when completing the important to note that businesses that do
not have credit sales and purchases, or
corresponding entries to the other ledger do not allow returns of goods may have
accounts; they refer to that as posting. all transactions recorded in the general
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Student’s Book Form One
Book Keeping Form 1 New 2024 FINAL.indd 46 18/10/2024 10:14
