Single Column Cash Book has a structure similar to an account. There is only one column (i.e. Cash) on both sides of the Cash Book. The Left Side (Debit side) of the Cash Book consists of Cash Receipts and the Right Side (Credit side) consists of Cash Payments.
Balancing of Single Column Cash Book
Like any other Ledger Account, Cash Book is also balanced. Total of Payment side is deducted from the Total of Receipt side, difference amount is written on the credit side as “Balance c/d”. After both, sides are totaled then this “Balance c/d” is written on the debit side as “Balance b/d”, this shows the opening Cash Balance of the next period.
Points to be considered for preparing Single Column Cash Book
- If Cash Book is prepared then there is no need to open a Cash Account.
- Balancing of Cash Book is done in the same way as we balance any other Ledger Account.
- Cash Book always has a debit balance, in no case, it can have a credit balance. If there is a credit balance this shows Cash Payments is in excess of Cash Receipts which is practically impossible.
- Cash Book does not record non-cash transactions i.e. transactions related to Cheques received or issued and discounts allowed or received.
- When an entry is recorded in the Cash Book, its second effect is recorded in the corresponding ledger. For example, Cash Received from Mohan Rs 5,000. There are two effects of this transaction. First, as Cash is received so it will be recorded on the debit side of the Cash Book with Rs 5,000. The second effect of this transaction is, it will be recorded on the credit side of the Mohan Account with Rs 5,000.
Cash Book always has a debit balance, in no case, it can have a credit balance. If there is a credit balance this shows Cash
Payments are in excess of Cash Receipts which is practically impossible. Although it may be possible that the closing balance of the Cash Book is nil and it is possible only in one case i.e. where Cash Receipts are exactly equal to Cash Payments.
Ledger in Accounting?
Ledger is the next stage after Journal. After recording all the entries in the Journal, the next step is the posting of the transaction in the respective accounts. These accounts are collectively known as Ledgers.