a)Bank Column in cash book serves the purpose of a Bank Account in the ledger

There are broadly three types of accounts:

i.Savings bank account

ii.Current account

iii.Fixed deposit account

In case of savings bank account there are certain restrictions on the number and amount of withdrawals. It is mainly intended to encourage savings. Hence, it is not considered suitable for business purposes. 

Business firms generally open current account. There are no restrictions on the number and amount of withdrawals in case of a current account. Any amount can be withdrawn any number of times from a current account.

Fixed deposit account is meant for deposits for a fixed period. Withdrawal of fixed deposits is allowed only on maturity. It is used by people generally for long term savings. 

b)Advantages of having a bank account

There are various advantages of maintaining an account with the bank. These are:

i.Money is safe and it also earns some interest

ii.The bank provides various types of loans

iii.It is easy and safe to make payments by issuing cheques

iv.Money can be sent or transferred to other places at a nominal charge through a bank

v.The bank helps in collection of bills, cheques, etc., on behalf of its customers

vi.If 'standing instructions' are given to the bank, it collects interest on debentures, dividend on shares, etc., and makes payment of insurance premium, pension, subscriptions, etc., on behalf of its customers

c)Effect of crossing a Cheque

If two parallel lines are drawn on the left hand top comer of the cheque, it is called 'Crossing', and such a cheque is called a 'Crossed Cheque'. A crossed cheque cannot be uncashed directly at the counter. It has to be deposited in an account with a bank. This makes it safe, as the party to whom the payment is made can be easily identified. Crossing can be 'General Crossing' or 'Special Crossing’.

General crossing is one where two parallel lines are drawn across the cheque with or without the words '&Co.', 'Not Negotiable', 'Nc Payee' . In case of special crossing, the name of a particular bank is also mentioned. This implies that the amount of cheque is payable only to the bank named in the crossing. The name of 'Bank of Baroda, Agra' is written within the two parallel lines. Payment of this cheque can be collected only through Bank of Baroda, Agra. 

In case of general crossing, payment can be made to any bank which presents me cheque for payment. The use of words 'A/c Payee Only' means that the cheque can be paid only into the account of the payee named in the cheque. The words ‘Not Negotiable' provide further safeguard against stolen and forged cheques. But '& Co.’ has no special connotation. 

d)Contra Entry

The word 'contra' means 'the other side'. If the double entry of a transaction is complete in the cash book itself such entry is called 'contra entry'. Contra entry arises only when cash account and bank account are simultaneously involved in a transaction. It happens only when either cash is deposited in the bank or cash is withdrawn from it. In both cases entries have to be made in cash as well as bank columns. When cash is deposited in the bank it is recorded

i.In bank column on the debit side of the cash book

ii.In cash column on the credit side of the cash book

üSimilarly, when cash is withdrawn from the bank, it is recorded on the

i.Debit side in cash column, and

ii.On the credit side in bank column.

It must, however, be noted that if cash is withdrawn from bank for personal use of the owner, it is recorded only on the credit side of cash book in bank column as drawings

In order to denote contra entries, the capital letter 'C' is written in the L.F. column on both sides of the cash book. It means that the corresponding aspect of the transaction is entered on the other side (contra) of the same page of the cash book. The letter 'C' also indicates that the relevant entry need not be posted into the ledger, as the double entry is complete in the cash book itself.