How to Use This Page
Solve each Samacheer Kalvi exercise question on your own first, then compare your format and totals. Subsidiary Books II focuses on the Cash Book in all its forms — single, double, and three-column. Practise the formats and contra entries until they're automatic.
Key Concepts (Quick Recap)
Types of Cash Books
| Type | Columns (each side) | Records |
|---|
| Single-column | Cash only | Cash receipts and payments |
| Double-column | Discount + Cash | Cash transactions with cash discount |
| Three-column | Discount + Cash + Bank | Cash, bank, and discount transactions |
| Petty cash book | Analytical columns | Small (petty) cash payments |
Three-Column Cash Book Format
Dr. CASH BOOK Cr.
Date | Particulars | L.F. | Discount | Cash | Bank | Date | Particulars | L.F. | Discount | Cash | Bank
-----|-------------|------|----------|------|------|------|-------------|------|----------|------|------
- Discount Allowed (Dr side): Recorded when we give discount to customers
- Discount Received (Cr side): Recorded when we receive discount from suppliers
- Cash column: Cash in hand
- Bank column: Bank transactions (cheques, deposits)
Contra Entry
A transaction that appears on BOTH sides of the cash book: 1. Cash deposited into bank: Debit Bank column, Credit Cash column 2. Cash withdrawn from bank for office use: Debit Cash column, Credit Bank column
- Marked with 'C' in the L.F. column
- Does NOT affect the total of the cash book
Petty Cash Book (Imprest System)
- Maintained by the petty cashier for small payments
- Under imprest system: fixed amount given at start, reimbursed for exact amount spent at end
- Has analytical columns: postage, stationery, conveyance, etc.
- Total petty cash payments = Amount reimbursed
Balancing the Cash Book
1. Cash column: Always has a debit balance (or nil). Can never have a credit balance. 2. Bank column: Can have a debit balance (money in bank) or credit balance (overdraft). 3. Discount columns: NOT balanced. Totalled and posted to:
- Discount Allowed total → Debit of Discount Allowed A/c
- Discount Received total → Credit of Discount Received A/c
I. Choose the Best Answer (MCQs)
Q1. A three-column cash book has columns for (a) Cash, Bank, Discount (b) Cash, Purchases, Sales (c) Cash, Credit, Debit (d) Receipts, Payments, Balance
Answer(a) Cash, Bank, Discount — A three-column cash book has Discount, Cash, and Bank columns on both the debit and credit sides.
Q2. A contra entry is marked with (a) 'R' in the L.F. column (b) 'C' in the L.F. column (c) 'B' in the L.F. column (d) No mark
Answer(b) 'C' in the L.F. column — A contra entry appears on both sides of the cash book (e.g., cash deposited into bank). It is marked with 'C' (for contra) in the L.F. column to indicate that no separate posting is needed.
Q3. When cash is deposited into bank, the entry is (a) Debit Cash column, Credit Bank column (b) Debit Bank column, Credit Cash column (c) Debit Bank column, Credit Discount column (d) Debit Cash column, Credit Discount column
Answer(b) Debit Bank column, Credit Cash column — When cash is deposited into the bank, the bank receives money (debit Bank column) and cash goes out (credit Cash column). This is a contra entry.
Q4. The petty cash book is maintained under the imprest system. This means (a) Fixed amount is given at the start and reimbursed for amount spent (b) Variable amount is given each month (c) No reimbursement is made (d) Petty cashier borrows from the main cashier as needed
Answer(a) Fixed amount is given at the start and reimbursed for amount spent — Under the imprest system, the petty cashier receives a fixed amount (the imprest). At the end of the period, the main cashier reimburses the exact amount spent, restoring the petty cash to the original imprest amount.
Q5. Discount columns in the cash book are (a) Balanced like cash and bank columns (b) Totalled and posted to Discount Allowed and Discount Received accounts (c) Ignored (d) Transferred to the trial balance directly
Answer(b) Totalled and posted to Discount Allowed and Discount Received accounts — Discount columns are NOT balanced. The total of the discount allowed column is posted to the debit of Discount Allowed Account, and the total of the discount received column is posted to the credit of Discount Received Account.
II. Fill in the Blanks
1. A single-column cash book has only the cash column on each side. 2. A three-column cash book has discount, cash, and bank columns on each side. 3. A contra entry is marked with 'C' in the L.F. column. 4. When cash is withdrawn from bank for office use, the bank column is credited. 5. Under the imprest system, the petty cashier is given a fixed amount at the beginning of the period. 6. Discount allowed is recorded on the debit side of the cash book. 7. Discount received is recorded on the credit side of the cash book. 8. The cash column always has a debit balance. 9. The bank column can have a credit balance (overdraft). 10. Discount columns are not balanced but are totalled and posted to ledger accounts.
III. True or False (with corrections for false statements)
Q1. A cash book is both a journal and a ledger.
AnswerTrue — The cash book is a book of original entry (journal) because transactions are first recorded in it. It is also a ledger account because it contains the cash account and bank account.
Q2. The cash column can have a credit balance.
AnswerFalse — Correction: The cash column can only have a DEBIT balance or nil balance. It cannot have a credit balance because a business cannot pay more cash than it has.
Q3. Discount columns in the cash book are balanced like the cash and bank columns.
AnswerFalse — Correction: Discount columns are NOT balanced. They are totalled and the totals are posted to Discount Allowed Account (debit total) and Discount Received Account (credit total).
Q4. When cash is deposited into bank, only the bank column is affected.
AnswerFalse — Correction: When cash is deposited into the bank, BOTH the cash column (credit) and the bank column (debit) are affected. This is a contra entry.
Q5. Under the imprest system, the petty cashier receives the same fixed amount each time.
AnswerTrue — Under the imprest system, the petty cashier receives a fixed amount at the start. At the end of the period, the exact amount spent is reimbursed, restoring the petty cash to the original fixed amount.
IV. Match the Following
| Column A | Column B | Answer |
|---|
| 1. Single-column cash book | (a) Cash + Bank + Discount | (b) Cash only |
| 2. Three-column cash book | (b) Cash only | (a) Cash + Bank + Discount |
| 3. Contra entry | (c) Small payments | (d) Both sides of cash book affected |
| 4. Petty cash book | (d) Both sides of cash book affected | (c) Small payments |
| 5. Imprest system | (e) Fixed amount reimbursed | (e) Fixed amount reimbursed |
V. Answer Briefly (2-mark questions)
Q1. What is a three-column cash book? How is it different from a single-column cash book?
Answer
A three-column cash book has three columns on each side: Discount, Cash, and Bank. A single-column cash book has only one column on each side (Cash). The three-column cash book additionally records bank transactions and cash discount.
Q2. What is a contra entry? Give two examples.
Answer
A contra entry is an entry that appears on both the debit and credit sides of the same cash book, affecting both the cash and bank columns. Examples: 1. Cash deposited into bank: Dr Bank column, Cr Cash column 2. Cash withdrawn from bank for office use: Dr Cash column, Cr Bank column
Q3. Explain the imprest system of petty cash.
Answer
Under the imprest system, the petty cashier receives a fixed amount (imprest) at the beginning of the period. During the period, all small payments are made from this petty cash. At the end of the period, the main cashier reimburses the exact amount spent, restoring the petty cash to the original imprest amount. Example: If imprest = ₹5,000 and total payments = ₹3,200, then reimbursement = ₹3,200 and petty cash balance = ₹5,000.
Q4. How are discount columns in the cash book treated?
Answer
The discount columns are NOT balanced. They are totalled at the end of the period: - Total of Discount Allowed column (Dr side) → Posted to Debit of Discount Allowed Account - Total of Discount Received column (Cr side) → Posted to Credit of Discount Received Account
VI. Answer in Detail (5-mark questions)
Q1. From the following transactions, prepare a Three-Column Cash Book:
Answer
2024 April 1: Cash in hand ₹10,000; Bank balance ₹25,000 (Dr) April 3: Purchased goods by cheque ₹8,000 April 5: Received from Raj ₹4,900 after deducting 2% discount April 7: Paid to Sita ₹3,900 in full settlement of ₹4,000 April 10: Cash deposited into bank ₹3,000 April 15: Withdrew from bank for office use ₹2,000 April 20: Paid rent by cheque ₹1,500 April 25: Received commission by cheque ₹1,000 April 28: Withdrew for personal use ₹500 (cash) April 30: Bank charges ₹200 (appeared in bank statement)
Three-Column Cash Book
Dr. CASH BOOK Cr.
Date | Particulars | L.F.| Discount| Cash | Bank | Date | Particulars | L.F.| Discount| Cash | Bank
| | | Allowed | ₹ | ₹ | | | | Received | ₹ | ₹
-------|-----------------|-----|---------|-------|-------|--------|---------------|-----|---------|-------|------
Apr 1 | To Balance b/d | | |10,000 |25,000 | Apr 3 | By Purchases | | | | 8,000
Apr 5 | To Raj | | 100 | 4,900 | | Apr 7 | By Sita | | 100 | 3,900 |
Apr 10 | To Cash (C) | C | | | 3,000 | Apr 10 | By Bank (C) | C | | 3,000 |
Apr 15 | To Bank (C) | C | | 2,000 | | Apr 15 | By Cash (C) | C | | | 2,000
Apr 25 | To Commission | | | | 1,000 | Apr 20 | By Rent | | | | 1,500
| | | | | | Apr 28 | By Drawings | | | 500 |
| | | | | | Apr 30 | By Bank Charges| | | | 200
| | | | | | Apr 30 | By Balance c/d| | | 9,500 |17,300
-------|-----------------|-----|---------|-------|-------|--------|---------------|-----|---------|-------|------
| | | 100 |16,900 |29,000 | | | | 100 |16,900 |29,000
-------|-----------------|-----|---------|-------|-------|--------|---------------|-----|---------|-------|------
May 1 | To Balance b/d | | | 9,500 |17,300 | | | | | |
Working Notes:
- Apr 5: Raj ₹5,000 − 2% = ₹4,900 received; Discount Allowed = ₹100
- Apr 7: Sita ₹4,000 − ₹100 discount = ₹3,900 paid; Discount Received = ₹100
- Apr 10: Cash deposited into bank → Contra entry (C)
- Apr 15: Cash withdrawn from bank → Contra entry (C)
- Apr 30: Bank charges ₹200 appeared in bank statement but not in cash book → Added to credit side
Q2. Prepare a Petty Cash Book under the Imprest System (imprest ₹2,000):
Answer
2024 May 1: Received from main cashier ₹2,000 May 3: Postage stamps ₹80 May 5: Stationery ₹150 May 8: Conveyance ₹120 May 12: Courier charges ₹50 May 15: Tea and refreshments ₹90 May 18: Bus fare ₹60 May 20: Stationery ₹110 May 23: Postage ₹40 May 27: Conveyance ₹70 May 30: Telegram charges ₹30
Petty Cash Book (Analytical Columns)
Receipts | Date | Particulars | V.No. | Amount | Postage | Stationery | Conveyance | Others
---------|------|--------------------|-------|--------|---------|------------|------------|--------
2,000 |May 1 | To Cash from | | | | | |
| | Main Cashier | | | | | |
|May 3 | Postage stamps | | 80 | 80 | | |
|May 5 | Stationery | | 150 | | 150 | |
|May 8 | Conveyance | | 120 | | | 120 |
|May 12| Courier charges | | 50 | 50 | | |
|May 15| Tea/refreshments | | 90 | | | | 90
|May 18| Bus fare | | 60 | | | 60 |
|May 20| Stationery | | 110 | | 110 | |
|May 23| Postage | | 40 | 40 | | |
|May 27| Conveyance | | 70 | | | 70 |
|May 30| Telegram charges | | 30 | | | | 30
---------|------|--------------------|-------|--------|---------|------------|------------|--------
2,000 |May 31| Total | | 800| 170 | 260 | 250 | 120
|May 31| Balance c/d | | 1,200 | | | |
---------|------|--------------------|-------|--------|---------|------------|------------|--------
2,000 | | | | 2,000 | | | |
---------|------|--------------------|-------|--------|---------|------------|------------|--------
|Jun 1 | To Cash from | | | | | |
| | Main Cashier | | 800 | | | |
| | (Reimbursement) | | | | | |
Reimbursement = ₹800 (exact amount spent), restoring petty cash to ₹2,000.
Common Mistakes to Avoid
- Not marking contra entries: Cash deposited into bank and cash withdrawn from bank must be marked with 'C' in the L.F. column. Without the 'C', they will be double-posted.
- Balancing discount columns: Discount columns are NOT balanced — they are totalled and posted to Discount Allowed and Discount Received accounts.
- Confusing discount allowed and received: Discount ALLOWED is on the DEBIT side (we give discount). Discount RECEIVED is on the CREDIT side (we receive discount).
- Bank overdraft in cash book: When the bank column has a credit balance (overdraft), it appears as "Balance c/d" on the debit side and "Balance b/d" on the credit side in the next period.
- Recording bank charges in the cash column: Bank charges should be recorded in the BANK column (credit side), not the cash column.
- Forgetting to carry forward the balance: After balancing the cash and bank columns, always bring forward the balance as "Balance b/d" in the next period.
Exam Checklist
- [ ] Can you prepare a single-column cash book?
- [ ] Can you prepare a double-column cash book (Cash + Discount)?
- [ ] Can you prepare a three-column cash book (Cash + Bank + Discount)?
- [ ] Can you identify and mark contra entries?
- [ ] Can you handle bank overdraft in the cash book?
- [ ] Can you prepare a petty cash book under the imprest system?
- [ ] Can you correctly post discount columns to the ledger?
- [ ] Can you balance the cash and bank columns?
- [ ] Can you distinguish between trade discount and cash discount in the cash book?
- [ ] Can you handle bank charges, interest, and other bank transactions?
