Recording of Transactions - II
Special purpose books include cash book, sales book, sales return book, purchase book; purchases return book, bills receivable book, bills payable book and journal proper. Cash book records all cash receipts and cash payments. It can be further classified as single column cash book, double column cash book and petty cash book. It serves purpose of cash and bank account and there is no need to prepare a separate ledger account. Single column cash book keeps a complete record of cash receipts and cash payments in a chronological order. Single column cash book itself is a cash account. Rule of real account is applied, i.e. debit what comes in and credit what goes out. Double column cash book adds the bank column on both the sides of the cash book. It has two columns on each side. Left side is used to record cash receipts and bank receipts in their respective columns. Right side is used to record cash payments and bank payments in their respective columns.
Bank overdraft is a situation in which, cash drawn from the bank exceeds the amount of deposit. Contra entry is an entry which is recorded on both sides of the cash book. Petty cash book is maintained by petty cashier to record the large number of small payments that are generally repetitive in nature. Advantages of petty cash book are burden of main cash book keeper is reduced, helps in preparation of ledger accounts, etc. Cash is maintained on the basis of ordinary system or imprest system. Under Imprest System of Petty cash the amount actually spent by the petty cashier is reimbursed to him by the chief cashier.