Meaning of Cash Book:

A cash book is a book in which all transactions relating to cash receipts and cash payments are recorded. It starts with the cash or bank balances at the beginning of the period and is generally made on a monthly basis. It is maintained by all organisations, whether big or small, profit or not-for-profit.

The cash book serves the purpose of both the journal as well as the ledger (cash) account. It is also called the book of original entry. When a cash book is maintained, transactions of cash are not recorded in the journal, and no separate account for cash or bank is required in the ledger.

Types of Cash Book:

1. Single Column Cash Book: This type of cash book records all cash transactions of the business in a chronological order. It is a complete record of cash receipts and cash payments. When all receipts and payments are made in cash by a business organisation only, the cash book contains only one amount column on each (debit and credit) side. The debit side records receipts and the credit side records payments.

2. Double Column Cash Book: This cash book has two amount columns on each side – one for Cash ₹ and another for Bank ₹. This allows for recording of both cash and bank transactions in the same book.

The cash book is balanced in the same way as an account in the ledger. It will always have a debit balance because cash payments can never exceed cash receipts and cash in hand at the beginning of the period.