a)'Cash Book is both a journal and a ledger’ 

In any business there would be numerous cash transactions which involve either receipts or payments of cash. Cash sales, receipt of cash from debtors, cash purchases, payments to creditors, payment of various expenses such as salaries, wages, rent, taxes, etc., are some examples of transactions involving cash. All these are recorded in cash book, receipts on one side and payments on the other. Every business unit, small or big, maintains a cash book. It enables the businessman to know and verify the amount of cash in hand from time to time. As a matter of fact, cash book plays a dual role. It is a book of prime entry and also serves the purpose of a Cash Account. It is designed in the form of a ledger account and records cash receipts on the debit side and payments on credit side. It is also balanced in the same way. 

According to rules, Cash Account is to be debited when cash is received and credited when cash is paid. Hence, the debit side of the cash book is used for recording all cash receipts and the credit side for all cash payments. Let us now discuss how entries are made in this book. As explained above, whenever cash is received, it is to be recorded on the debit side. The date on which it is received is recorded in the date column. The name of the account from which it is received is mentioned in the particulars column. In the L.F. (Ledger Folio) column the page number of the account in the ledger, where the posting is made, is to be recorded at the time of posting. 

b)lmprest System

Generally, Petty Cash Book is maintained on Imprest System. Under this system an estimate is made of the amount required for petty payments for a certain period, say a week or a month. This amount is handed over to the petty cashier in advance. The petty cashier is required to obtain vouchers for all expenses he incurs. At the end of the period, the petty cashier presents the Petty Cash Book together with the vouchers to the chief cashier. The chief cashier verifies the entries in the Petty Cash Book and pays to the petty cashier a sum equal to the amount spent by him. The original amount of the petty cash with which the petty cashier had started is thus restored. This system of advance at the beginning and reimbursing the amount spent from time to time is called 'Imprest System'. 

c)Types of Cash Books

There are different types of cash books maintained by the business. They are:

1.Simple or Single Column Cash Book

2.Two or Double Column Cash Book

3.Three or Triple Column Cash Book

Simple or Single Column Cash Book:

A Single Column Cash Book is nothing but a Cash Account. It is used for recording all cash receipts and cash payments and serves the purpose of Cash Account as well. It is called Single Column Cash Book just because it has only one amount column on each side. 

Two or Double Column Cash Book:

The discount glowed to debtors is recorded on the debit side and the discount received from creditors is recorded on the credit side. Thus, now there are two amount columns on both sides of the cash book, one for discount and the other for cash. It is called 'Two Column Cash Book’.

Three or Triple Column Cash Book:

In every business there will be numerous small payments in cash such as payments for postage, telegrams, stationery, cartage, conveyance, entertaining the customers, minor repairs, etc. If all these petty payments are recorded in the cash book along with other payments, the cash book will be overloaded. Hence, a separate book called 'Petty Cash Book' is maintained for recording all such small (petty) payments.

d)Posting of Two Column Cash Book.

The entries in the cash columns of Two Column Cash Book are posted to the ledger accounts in the same way as we did in the case of Single Column Cash Book. The entries in the discount columns are also to be posted to the respective personal accounts. The entries in discount allowed column will be posted to the credit side of the respective personal accounts by writing 'By Discount Allowed Nc’. Similarly, the entries in the discount received column will be posted to the debit side of the + respective personal accounts by writing 'To Discount Received Nc'. For example. Cash received from Devi Traders Rs. 490, and discount allowed Rs. 10: This transaction will be entered in particulars column on the debit side of the cash book by writing 'To Devi Traders Nc'. An amount of Rs. 10 will be shown in discount allowed column and Rs. 490 in cash column. 

Its posting into Devi Traders' Account in the ledger will be made as follows:

As for the transactions relating to cash, the double entry is complete as soon as postings have been made to the respective personal accounts. But it is not so for the discount aspect. The cash book does not serve the purpose of discount account. We have to open 'Discount Allowed Account' and 'Discount Received Account' in the ledger. The total of discount allowed columns on the debit side of the cash book is posted to the debit side of the 'Discount Allowed Account' in the ledger by writing 'To Sundries'. 

Similarly, the total of discount received column on the credit side of the cash book is posted to the credit side of the 'Discount Received Account' in the ledger by writing 'By Sundries'. This will complete the double entry in respect of discount allowed and discount received. Note that the postings in the two discount accounts are made only for the totals and not for the individual transactions. Thus we save time and labor.