Students must practice these AP Inter 1st Year Accountancy Important Questions 8th Lesson Cash Book to boost their exam preparation.
AP Inter 1st Year Accountancy Important Questions 8th Lesson Cash Book
Long Answer Questions
Question 1.
Describe the meaning and importance of cash book.
Answer:
Among the entire subsidiary books cash book is one of the important books. In this book we record cash receipts and cash payments. The main objective of cash book is to know the balance of cash at any given time. The person who maintains cash book is known as cashier. Business transactions are mainly two kinds.
- Cash Transactions
- Credit Transactions
All cash transactions are two types:
- Cash receipts
- Cash payments
Cash receipts should be recorded on debit side and cash payments are on the credit side. Generally cash book shows debit balance, because a business unit cannot pay more than its receipts.
Question 2.
Briefly explain the different types of cash books.
Answer:
The form of the cash book depends on the need, nature and scope of activities of a business firm.
They are as follows :
- Simple cash book
- Double column cash book
i) With cash and discount columns
ii) With bank and discount columns - Triple column cash book
- Analytical petty cash book
1) Simple Cash Book: The simple cash book is maintained by small business concern. Only cash transactions are recorded in this book. Cash receipts are to be recorded on the debit side and cash payments are on credit side. After entering all the transactions, the balance is ascertained like other accounts.
2) Double Column Cash Book:
a) Cash Book with Cash and Discount Columns : The transactions pertaining to cash and cash discounts are also recorded. To record the discount involved in any transactions one additional column on both sides of the cash book is provided. Discount column on the debit side should be named as discount allowed, and on the credit side discount received. They should not be balanced.
b) Cash Book with Bank and Discount Columns : Modern business organisations carry their transactions in the form of cheques through banks. The receipts and payments of the business are made through cheques. They maintain bank column in the cash book. The traders deposit money and cheques into bank account and make payments by cheques. The traders’ deposit through bank is having advantages of safety and convenience.
3) Triple Column Cash Book: This book also known as cash book with cash discount and bank columns. It contains three columns on both the sides. Three column cash book is used by big trading organisations, to record large number of cash and bank transactions of different nature.
4) Analytical Petty Cash Book: In large scale business organisation cash is paid and received through banks, but every day the organisation has to pay various small payments. It is not possible to pay small payments through cheques and enter in the cash book. Hence all petty payments of the business are recorded in a separate cash book which is called a Petty Cash Book,
Question 3.
Write the importance of Triple column cash book and draw its pro forma.
Answer:
Triple column cash book contains three columns on both sides (debit and credit) in addition to date, particulars and L.F columns. Three column cash book is very useful to the big trading organisations for the following reasons.
- It helps to record cash Receipts and also Receipts through cheques.
- It is useful to record Cash Payments and also Payments by Cheques.
- It helps to record large number of cash and bank transactions of different nature.
- It is useful to record Contra Entries.
Question 4.
Explain the important points to be followed in the preparation of three column cash book.
Answer:
The following points are to be noted carefully while preparing three column cash book.
1) Opening cash and bank balances are recorded on the debit side of the cash and bank column as “To Balance b/d” in the particulars column.
2) If the overdraft is given as opening bank balance, it should be recorded on the credit side of Bank column.
3) All cash receipts should be recorded on the debit side cash column and cash payments are recorded in the cash column on the credit side.
4) If any cheque is received from customers and if it was not deposited in the bank on the same day, it should be debited to cash column.
5) If cheque is received and sent to bank on the same day, it should be debited to bank column.
6) Any payment made through cheque, should be credited to bank column on the credit side.
7) If discount amounts are involved either in cash or in bank transactions, discount allowed should be recorded on the debit side and discount received should be recorded on the credit side in the discount column.
8) If the cheques sent to bank for collection are dishonoured, it should be recorded in the bank column on debit side.
9) The transaction which is passed on both sides of the cash book is called ‘Contra Entry’. While opening bank a/c, cash deposited in bank, cash withdrawn from bank for personal use and cheque received on one day but deposited on another day. Contra entries will appear on both sides. It is denoted by “C”.
Short Answer Questions
Question 1.
Explain the advantages of cash book.
Answer:
Advantages of Cash Book:
- It helps to know the amount of cash received and the amount of cash paid by the Business Unit.
- It gives the Cash and Bank balances of a business unit at any given period.
- Mistakes or Fraud can be detected by verifying the closing balance of cash book with the actual amount of cash in hand.
- As cash book acts as Cash A/c, preparation of a separate Cash A/c (ledger) is not required.
Question 2.
Give the characteristics of cash book.
Answer:
Characteristics of Cash Book:
- Cash book is a Subsidiary Book.
- It records only Cash Transactions.
- Cash book serves as Cash Account.
- It records cash receipts on the debit side and cash payments on the credit side.
- Cash book will show Debit Balance only.
Very Short Answer Questions
Question 1.
Cash Discount [Mar ’17 (TS)]
Answer:
It is given for prompt and early payment. If a debtor pays the amount to the creditor on or before the due date, he may receive discount in the form of cash. It is known as cash discount. It is discount received for the debtor and discount allowed for the creditor. The discount column is maintained on both sides of the cash book.
Question 2.
Discount Allowed
Answer:
Discount given or allowed by the creditor is known as discount allowed. It is a loss for the creditor. This was allowed to the debtor for prompt payment.
Question 3.
Discount Received
Answer:
If a debtor pays the amount on or before the due date, he may receive discount in the form of cash. It is gain for the debtor. It is called discount received.
Question 4.
Contra entry [May. 2019; May ’17-T.S.; Mar. 2018]
Answer:
The transaction which is recorded on both sides of Triple column cash book i.e. Cash and Bank on the opposite sides is called contra entry. Contra means opposite side. It should be denoted by “C” in the L.F column on both sides of Triple Column Cash Book.
Question 5.
Imprest System
Answer:
In this system petty cash payments for a period is estimated and that amount is given to the petty cashier as advance. The cashier makes payments from this amount and records them in petty cash book. At the end of a particular period the petty cashier submits petty cash book to the Head Cashier. The Head Cashier scrutinizes the petty payments and issues a fresh cheque equal to the amount of petty expenses paid. This system of book keeping is called Imprest System.
Problems
Question 2.
Enter the following transactions in single column cash book of Farma traders
2013 — Rs.
Dec. 1 — Cash in hand — 11,500
2 — Sold goods — 2,600
5 — Purchased furniture — 3,500
8 — Purchased goods for Cash — 2,000
10 — Stationery Purchased — 700
12 — PaId to Vasu — 900
15 — Purchased goods from Sekhar — 650
18 — Paid telephone bill — 500
20 — Sold goods to Han — 800
25 — Paid Interest — 250
29 — Paid cash to Sekhar — 650
30 — Received Commission — 400
Answer:
Question 3.
Prepare Simple Cash Book as on 31.3.2014.
2014 — Rs.
March 1 — Started Business with — 10,000
4 — Purchases — 2,000
6 — Deposited cash into bank — 3,000
8 — Sales — 1,200
10 — Purchased goods from Ramesh on Cash — 500
14 — Paid Managers Salary — 800
16 — Paid Office Expenses — 300
17 — Purchased Stationary — 350
21 — Sold old Machine — 900
23 — Drawings — 700
25 — Paid Rent — 1,500
29 — Received Interest — 550
31 — Paid travelling expenses — 825
Answer:
Question 4.
Record following transactions in Two Column Cash book as on 31.1.2014:
2014 — Rs.
Jan 1 — Balance of cash — 5,500
2 — Paid to Nagarjuna — 1250
Discount received — 250
4 — Cash Sales — 1000
6 — Cash Purchases — 900
10 — Received Cash from Raju — 850
Discount allowed — 150
16 — Paid Cash to Mahesh — 650
Discount received — 150
18 — Paid Advertisements expenses — 600
20 — Received cash from Praveen — 800
Discount allowed — 200
24 — Paid for Repairs — 400
27 — Sold old newspapers — 200
29 — Received Cash from Ram — 325
Discount allowed — 75
31 — Paid Salaries — 750
Answer:
Question 5.
Prepare Double Column Cash Book with Cash and Discount Columhs:
2014 — Rs.
April 1 — Cash in hand — 9500
3 — Deposited cash into bank — 3000
5 — Drawings — 1500
10 — Withdrawn Cash from bank — 1400
12 — Paid Cash to Dasarath — 350
Discount received — 50
13 — Received Cash from Arvind — 475
Discount allowed — 125
16 — Sold old furniture — 300
20 — Cash Received from Gopal — 1500
Discount allowed — 100
24 — Paid office expenses — 600
26 — Paid for stationery — 450
28 — Rent paid — 950
29 — Paid cash to Krishna — 250
Discount received — 50
30 — Paid Salary — 600
Answer:
Question 6.
Prepare Double Column Cash Book from the following.:
2014 — Rs.
Feb 1 — Cash in hand — 13000
4 — Paid to Charan — 1800
Discount received — 200
5 — Deposited into Bank — 4000
8 — Drawings — 400
10 — Paid cash to Chandu — 500
Discount received — 100
13 — Cash Sales — 450
15 — Received cash from Reddy Traders — 700
Discount allowed — 200
17 — Cash Purchases — 550
20 — Goods sold to Sripathi — 1000
23 — Wages paid — 250
25 — Received cash from Bhasha — 450
Allowed him discount — 50
27 — Paid cash to Madhu — 370
Discount received — 30
28 — Paid for carriage — 200
Answer:
Hint: Transaction dated 20th is a credit Transaction.
Question 7.
Prepare Two column cash book with Bank and Discount columns from the following:
2013 — Rs.
Nov. 1 — Opening Balance — 6500
3 — Received cheque from Raj — 950
Discount allowed — 50
6 — Sales — 1500
8 — Furniture purchased and paid by cheque — 1000
10 — Withdrawn from bank for personal use — 400
13 — Purchases — 700
17 — Paid to Vamsi by cheque — 450
In settlement of his account — 500
21 — Advertisement expenses — 800
23 — Sold goods to Ramana and received Cheque — 1200
27 — Paid rent to landlord — 600
30 — Salaries paid — 700
Answer:
Question 8.
Prepare Three Column Cash Book.
2012 — Rs.
Dec. 1 — Cash in hand — 12000
Cash at bank — 18000
3 — Cash Sales — 6000
8 — Received Cash from Madhu — 5800
Discount allowed — 200
14 — Issued Cheque to Hari — 9600
Discount received — 400
20 — Paid Commission — 500
23 — A Cheque Received from Govind — 3500
allowed him discount — 500
25 — Govind cheque deposited into Bank
26 — Bought furniture — 2000
28 — Withdrew from bank for office use — 5000
30 — Salaries paid by Cheque — 1000
(Hint: Transactions dated 25th and 28th are Contra entries.)
Answer:
Question 9.
Prepare three column cash book from the following particulars:
2013 — Rs.
Oct. 1 — Cash in Hand — 3500
Balance at Bank — 2500
3 — Purchases — 1100
5 — Sold goods for Cash — 900
7 — Paid cash to Raju — 525
Discount received — 75
9 — Deposited cash into Bank — 250
11 — Received cash from Srinivas — 350
Discount received — 50
13 — Received cheque from Hari and — 750
Discount received — 75
Hari cheque deposited into bank
15 — Paid to Ramesh by Cheque — 375
Discount received — 75
18 — Paid office expenses — 250
20 — Drawings — 300
25 — Withdrawn cash from bank for office use — 600
28 — Paid Salaries through cheque — 700
29 — Received Interest — 675
31 — Paid Rent — 800
Answer:
Question 10.
Prepare Triple Column Cash Book from the following:
2014 — Rs.
Jan 1 — Cash in Hand — 6900
Cash at Bank — 12000
3 — Issued cheque to Giri — 550
Discount received — 50
5 — Cash Sales — 1000
8 — Paid for Stationery — 200
10 — Received cheque from Kalyan — 425
Discount received — 75
13 — Sold old furniture — 400
15 — Purchased goods from Manasa — 700
17 — Deposited Kalyan cheque into Bank
20 — Paid to Akbar by cheque — 350
Discount received — 50
23 — Taken cash from bank for office use — 600
25 — Received cash from Manasa — 650
Discount received — 50
27 — Received commission — 800
29 — Received cheque from Bharath — 700
Discount received — 100
Bharath cheque sent to bank
31 — Paid rent 500
Answer:
Question 11.
Record the following transactions in Cash, Bank, and Discount Columns Cash Book
2013 — Rs.
Nov 1 — Cash balance — 8000
Bank Overdraft — 1000
3 — Deposited cash into bank — 500
6 — Cheque issued to Rohan — 450
Discount received — 50
8 — Received cheque from Sohan — 1350
And cheque is deposited into bank
12 — Cash received from Anil — 900
in full settlement of his account — 1000
14 — Withdrawn cash from bank — 900
15 — Paid interest — 400
17 — Commission received — 500
19 — Paid cash into Bank — 600
22 — Cash received from Sainath — 450
Discount received — 50
26 — Purchased stationery and paid by cheque — 400
28 — Sold old machinery — 800
30 — Salaries paid — 300
Answer:
Question 12.
From the following particulars, prepare three column cash book:
2013 — Rs.
Oct 1 — Cash in Hand — 4700
Cash at Bank — 1300
4 — Paid to Kowsik — 650
Discount received — 150
6 — Cash sales — 1000
8 — Paid cash to Mukesh — 350
Discount received — 50
10 — Received cheque from Prabhu — 1450
Discount received — 150
12 — Postal charges — 200
14 — Prabhu cheque deposited into Bank
16 — Received rent — 400
18 — Drew from bank for office use — 500
20 — Paid general expenses — 150
24 — Received cheque from Naresh — 2300
Discount received — 200
Naresh cheque sent to bank
29 — Paid into bank — 1000
31 — Salaries paid by cheque — 400
Answer:
Question 13.
Prepare triple column cash book from the following information: [Mar. ’20 – A.P; May ’17 – T.S.]
2014 (2019) — Rs.
Jan. 1 — Cash Balance — 10500
Bank Balance — 12000
4 — Cash sales — 3000
6 — Purchased goods from Ashok and paid by cheque — 2500
9 — Paid into Bank — 2000
15 — Paid to Phani — 1460
Discount received — 40
21 — Received from Syam a cheque — 980
Discount received — 20
(Syam cheque sent to bank)
25 — Cash withdrawn from bank for office use — 1000
30 — Paid rent by cheque — 1600
31 — Furniture bought by cheque — 500
Answer:
Question 14.
Prepare triple column cash book from the following particulars: ]
2014 — Rs.
March 1 — Cash in Hand — 11000
Cash at Bank * — 20000
5 — Cash Sales — 1900
7 — Issued cheque to Big Bazar — 1800
Discount received — 200
8 — Received cash from Sai Traders — 1500
Cheque — 350
Discount received — 150
(Cheque deposited into Bank)
14 — Cash withdrawn from Bank for office use — 550
18 — Salaries paid by cheque * — 400
22 — Cash purchases — 600
29 — Paid into bank — 800
Answer:
Question 15.
Prepare Three Column Cash Book from the following: [Mar. 2018 -A.P.]
2014 — Rs.
1 — Cash in Hand — 12000
Bank Balance (Credit) — 10000
5 — Paid to Hari by cheque — 425
Discount received — 75
9 — Sales — 1600
15 — Deposited Cash into Bank — 1300
18 — Received cheque from Kalyan — 1275
Discount received — 25
Kalayan cheque deposited into bank
20 — Taken cash from bank for personal use — 3000
25 — Paid salaries — 1200
27 — Telephone bill paid by cheque — 1250
28 — Drawn from bank for office use — 2000
Answer:
Question 16.
Prepare Three Column Cash Book from the following:
2014 — Rs.
March 1 — Cash balance — 4200
Bank balance — 1500
7 — Deposited cash into Bank — 1000
10 — Paid to Anil — 350
Discount received — 50
15 — Sales through Credit Card — 250
20 — Received Cheque from Srinivas — 850
Discount received — 150
Srinivas cheque sent to bank
25 — Cash withdrawn from Bank — 200
30 — Sales through Debit Card — 500
31 — Paid salaries — 300
Answer:
Question 17.
Prepare Three Column Cash book from the following particulars.
2014 — Rs.
May 1 — Cash Balance — 15000
1 — Bank Balance — 10000
3 — Paid Insurance premium by cheque — 4200
6 — Sold goods — 22000
7 — Cash deposited into Bank — 12000
10 — Received cash from Neelima — 6800
Discount allowed — 200
12 — Withdrawn from Bank for personal use — 6000
14 — Withdrawn from Bank for office use — 5000
15 — Telephone bill paid by cheque — 3000
16 — Cartage paid — 600
18 — Cheque received from Syamala — 7000
Discount allowed — 500
19 — Deposited Syamala cheque into bank
21 — Received rent — 800
24 — Cheque issued to Lalitha — 2600
Discount received — 400
28 — Paid for postage — 300
29 — Salaries paid — 4200
30 — Cash purchases — 6000
31 — Paid for charity by cheque — 2000
Answer:
Question 18.
Prepare Three Column Cash book ofMr.Stephen from the following particulars.
2004 — Rs.
June 1 — Cash in Hand — 10,000
Cash at Bank — 5,000
4 — Cash Sales — 3,500
6 — Issued cheque to ‘B’ — 2,950
Discount — 50
7 — Received cash from’R’ — 1,200
Cheque — 2,500
Discount — 100
(Cheque deposited with bank)
12 — Cash withdrawn from bank for office use — 800
20 — Paid salaries by cheque — 1,000
Answer:
Question 19.
Prepare Three Column Cash book of Mrs. Vijaya from the following particulars
2010 — Rs.
August 1 — Cash in Hand — 5,600
Cash at Bank — 10,500
3 — Cash Sales — 2,100
5 — Issued cheque to Venkatesh — 2,500
Discount receIved 200
12 — Cash deposited Into the bank — 1,500
15 — Paid interest through cheque — 1,200
18 — Withdrew cash from bank for office use — 600
20 — Cash purchases 2,600
25 — Sold old machinery 3,200
30 — Received a cheque from Ganesh and
deposited it in the bank — 7,500
Discount allowed — 100
Answer:
Question 20.
Prepare Analytical Petty Cash from the following particulars:
2013 — Rs.
August 1 — Received advance from Head Cashier — 300
7 — Paid for bus charges — 20
8 — Purchased white papers — 10
10 — Paid auto charges — 20
15 — Paid wages — 30
18 — Telegram charges — 20
21 — Purchased stationery — 25
23 — Tea expenses — 18
25 — Paid for speed post — 22
27 — Refreshments — 25
31 — Paid for carriage — 15
Answer:
Question 21.
Prepare Analytical Petty Cash Book.
Jan. 1 — Balance of cash — 175
Received advance from Cashier — 125
3 — Tiffin expenses — 40
5 — Postal stamps — 25
9 — Bus charges — 28
11 — Tea expenses — 16
14 — Auto charges — 20
18 — Tea expenses — 16
21 — Paid to Suresh — 30
25 — Sent telegram to Mumbai — 25
27 — Refreshments to guests — 20
29 — Paid Repairing charges — 25
31 — Postal cards and covers — 20
Answer:
Question 22.
From the following information, prepare Analytical Petty Cash Book and also prepare ledger:
2014 — Rs.
March 1 — Advance from cashier — 400
3 — Paid from stationery — 35
5 — Office expenses — 20
8 — Tiff I n Expenses — 40
10 — Paid for postage — 25
13 — Paid Zerox copies — 20
15 — Bus charges — 18
18 — Postal stamps — 25
20 — Tea expenses — 30
23 — Auto charges — 45
30 — Paid to Vani — 50
Answer:
Question 23.
Prepare three column cash book from the following information.
2020 — Rs.
January 1 — Cashmhand — 10,000
Cash at bank — 7,500
3 — Cash sales — 3,000
6 — Issued cheque to Raju — 3,500
Discount Received — 500
10 — Deposited cash into bank — 1,000
15 — Received cash from Ravi — 5,600
Discount Allowed — 400
17 — Paid Interest — 1,200
18 — Withdrawn cash from bank for office use 1,000
20 — Cash purchases 2,600
25 — Paid salaries by cheque — 1,500
30 — Received interest — 500
Answer:
