Financial Accounting IUnit 712 min read

Cash Book: Types, Entries & Reconciliation

Unit 7 of Financial Accounting I explains the Cash Book—its types (single-column, double-column, triple-column), formats, entries for cash transactions, and reconciliation with bank statements—using real-world examples like eSewa deposits and Khalti transactions, with visual t-accounts and worked examples in NPR.

Padhai · Based on the official syllabus and past papers
Updated 3 Oct 2026

TAKEAWAYS:

A Cash Book records all cash receipts and payments in chronological order, acting as a subsidiary book for the ledger.
It has three types: single-column (cash only), double-column (cash + bank), and triple-column (cash + bank + discount columns).
Contra entries (e.g., cash withdrawn from bank) are recorded in the bank column of a double-column Cash Book.
Discounts (cash and trade) are recorded in a triple-column Cash Book to track discounts allowed/received.
Bank reconciliation identifies discrepancies between the Cash Book and bank statement (e.g., unrecorded cheques, bank charges).
Exam focus: Trace cash transactions, prepare Cash Books, and reconcile statements—always show workings for adjustments.

1. What is a Cash Book?

A Cash Book is a specialized journal that records all cash transactions (receipts and payments) of a business in chronological order. It serves as both a journal (for recording transactions) and a ledger (for summarizing cash balances).

Why Use a Cash Book?

Single record: Avoids duplication of cash transactions in the general journal.
Real-time tracking: Helps monitor cash inflows/outflows daily.
Bank reconciliation: Easily compares cash book balances with bank statements.
Fraud prevention: Reduces errors by centralizing cash records.

2. Types of Cash Books

There are three main types, each suited to different business needs:

Type	Columns	When to Use	Example (Nepal)
Single-column	Cash (Dr/Cr) only	Small businesses with no bank account	A Kathmandu tea stall (cash-only)
Double-column	Cash + Bank (Dr/Cr)	Businesses with both cash and bank	A retail shop (eSewa + cash sales)
Triple-column	Cash + Bank + Discounts (Dr/Cr)	Businesses offering cash discounts	A Daraz seller (discounts on bulk)

3. Format of a Cash Book

A. Single-Column Cash Book

Records only cash transactions (no bank column).

| Date       | Particulars (L.F.) | L.F. | Amount (NPR) |
|------------|--------------------|------|--------------|
|            | **Dr. Cash A/c**   |      | **Cr.**      |
| 2024-01-01 | To Opening Balance |      | 50,000       |
| 2024-01-02 | By Sales           |      | 20,000       |
| 2024-01-03 | To Rent Paid       | 10,000|             |
| **Total**  |                    | **60,000** | **70,000**   |
| **Balance**|                    | **10,000** |              |

B. Double-Column Cash Book

Records both cash and bank transactions (used when a business has a bank account).

| Date       | Particulars (L.F.) | L.F. | Cash (NPR) | Bank (NPR) |
|------------|--------------------|------|------------|------------|
|            | **Dr. Cash A/c**   |      | **Cr.**    | **Dr.**    | **Cr.**    |
| 2024-01-01 | To Opening Balance |      | 50,000     |            |            |
| 2024-01-02 | By Sales           |      |            | 20,000     |            |
| 2024-01-03 | To Bank (Deposit)  |      | 10,000     |            | 10,000     |
| 2024-01-04 | By Cheque Received |      |            |            | 15,000     |
| **Total**  |                    |      | **60,000** | **20,000** | **25,000** |
| **Balance**|                    |      | **40,000** | **20,000** |            |

C. Triple-Column Cash Book

Includes discount columns for cash and trade discounts.

| Date       | Particulars (L.F.) | L.F. | Cash (NPR) | Discount (NPR) | Bank (NPR) |
|------------|--------------------|------|------------|----------------|------------|
|            | **Dr. Cash A/c**   |      | **Cr.**    | **Dr.**        | **Cr.**    | **Dr.**    | **Cr.**    |
| 2024-01-01 | To Opening Balance |      | 50,000     |                |            |            |            |
| 2024-01-02 | By Sales (Cash)    |      | 20,000     | 500 (Discount)|            |            |            |
| 2024-01-03 | To Rent Paid       | 10,000|            |                |            |            |            |
| **Total**  |                    |      | **60,500** | **500**       |            |            |            |
| **Balance**|                    |      | **39,500** |                |            |            |            |

4. Recording Transactions in Cash Book

A. Cash Receipts (Inflows)

Debit (Dr.) Cash/Bank when money is received.
Credit (Cr.) the relevant account (e.g., Sales, Loan).

Example 1: Cash Sales

Date	Particulars	Cash (NPR)
2024-01-05	By Sales (Cash)	15,000

Example 2: Cheque Deposited in Bank

Date	Particulars	Bank (NPR)
2024-01-05	By Cheque from Customer	10,000

B. Cash Payments (Outflows)

Credit (Cr.) Cash/Bank when money is paid.
Debit (Dr.) the relevant account (e.g., Rent, Salary).

Example 1: Rent Paid in Cash

Date	Particulars	Cash (NPR)
2024-01-05	To Rent Paid	8,000

Example 2: Cheque Issued for Purchase

Date	Particulars	Bank (NPR)
2024-01-05	To Supplier (Cheque)	5,000

C. Contra Entries (Cash ↔ Bank)

When cash is withdrawn from the bank or deposited into the bank, it is recorded in both columns of a double-column Cash Book.

Example: Withdrawing Cash from Bank

Date	Particulars	Cash (NPR)	Bank (NPR)
2024-01-06	To Cash (Withdrawn)	20,000	20,000

5. Discounts in Cash Book (Triple-Column)

Discounts are reductions in price given to customers for early payment or bulk purchases.

Type of Discount	Where Recorded	Example
Cash Discount	Cash Column (Dr.)	Customer pays ₹1,000 but gets ₹50 off
Trade Discount	Not in Cash Book (recorded at sale time)	Bulk purchase discount (e.g., 10% off)

Example: Cash Discount A customer buys goods worth ₹10,000 but pays ₹9,500 (₹500 discount).

| Date       | Particulars               | Cash (NPR) | Discount (NPR) |
|------------|---------------------------|------------|----------------|
| 2024-01-07 | By Sales (Cash)           | 9,500      | 500 (Dr.)      |

In the Real World

eSewa & Khalti Transactions
- When you deposit cash into eSewa or transfer money via Khalti, the business records this in the Cash Book (Bank Column).
- Example: A Kathmandu mobile shop deposits ₹50,000 in its bank account via eSewa. This is recorded as:
```
Bank A/c (Dr.) 50,000
    To Cash A/c 50,000
```
Daraz Sellers & Cash Discounts
- Daraz sellers often offer cash discounts for bulk orders. The triple-column Cash Book tracks these discounts separately.
- Example: A seller receives ₹20,000 for an order but gives ₹1,000 discount for early payment.
```
Cash A/c (Dr.) 19,000
Discount A/c (Dr.) 1,000
    To Sales A/c 20,000
```
Bank Reconciliation in Ncell & NTC
- Companies like Ncell and NTC reconcile their Cash Books with bank statements daily to detect unrecorded transactions (e.g., a customer’s cheque not yet cleared).
- Example: NTC’s Cash Book shows a ₹500,000 deposit, but the bank statement shows ₹495,000 due to ₹5,000 uncollected cheques.

6. Bank Reconciliation Statement (BRS)

A Bank Reconciliation Statement identifies discrepancies between the Cash Book and Bank Statement.

Common Reasons for Differences

Cash Book > Bank Statement	Bank Statement > Cash Book
Unpresented cheques (issued but not yet cleared)	Bank charges not recorded
Unrecorded deposits (direct deposits)	Interest credited by bank
Direct payments by bank (e.g., loan repayment)	Dishonored cheques

Example: Reconciling a Bank Statement

Given:

Cash Book Balance (31-12-2023): ₹150,000
Bank Statement Balance (31-12-2023): ₹145,000

Adjustments:

Unpresented Cheques: ₹10,000 (issued but not cleared)
Bank Charges: ₹5,000 (not recorded in Cash Book)
Direct Deposit by Customer: ₹2,000 (not recorded in Cash Book)

Bank Reconciliation Statement (BRS):

| **Particulars**               | **Amount (NPR)** |
|-------------------------------|------------------|
| **Cash Book Balance**         | 150,000          |
| **Add: Unpresented Cheques**  | 10,000           |
| **Less: Bank Charges**        | (5,000)          |
| **Add: Direct Deposit**       | 2,000            |
| **Bank Statement Balance**    | **145,000**      |

7. Worked Example: Cash Book for a Kathmandu Retail Shop

Business: Shree Mart (Retail Shop in Kathmandu) Transactions for January 2024:

Date	Transaction	Amount (NPR)
2024-01-01	Opening Balance (Cash)	100,000
2024-01-02	Sales (Cash)	50,000
2024-01-03	Paid Rent (Cash)	15,000
2024-01-04	Deposited Cash in Bank	30,000
2024-01-05	Received Cheque from Customer	20,000
2024-01-06	Withdrew Cash from Bank for Petty Cash	10,000
2024-01-07	Sold Goods on Credit (₹25,000) + 5% Cash Discount	23,750 (₹1,250 discount)

Double-Column Cash Book for Shree Mart:

| Date       | Particulars               | L.F. | Cash (NPR) | Bank (NPR) |
|------------|---------------------------|------|------------|------------|
| **2024-01-01** | **To Opening Balance**    |      | 100,000    |            |
| **2024-01-02** | **By Sales (Cash)**       |      |            | 50,000     |
| **2024-01-03** | **To Rent Paid**          | 15,000|            |            |
| **2024-01-04** | **To Bank (Deposit)**     |      | 30,000     | 30,000     |
| **2024-01-05** | **By Cheque Received**    |      |            | 20,000     |
| **2024-01-06** | **To Cash (Withdrawn)**  |      | 10,000     | 10,000     |
| **2024-01-07** | **By Sales (Cash Discount)** |      | 23,750     |            | 1,250 (Discount) |
| **Total**  |                           |      | **148,750**| **81,250** |
| **Balance**|                           |      | **67,500** | **61,250** |

Triple-Column Cash Book (for Discounts):

| Date       | Particulars               | L.F. | Cash (NPR) | Discount (NPR) | Bank (NPR) |
|------------|---------------------------|------|------------|----------------|------------|
| **2024-01-07** | **By Sales (Cash Discount)** |      | 23,750     | 1,250 (Dr.)    |            |

Exam Tip

Always show workings: If asked to prepare a Cash Book, list all transactions in order with proper Dr./Cr. entries.
Contra entries are key: In double-column Cash Books, withdrawals/deposits must be recorded in both columns.
Discounts must be separated: In triple-column Cash Books, cash discounts go in the Discount column (Dr.).
Bank Reconciliation is a must: If the question gives Cash Book and Bank Statement balances, always prepare a BRS showing adjustments.
Common mistakes to avoid:
- Forgetting to total and balance the Cash Book.
- Recording trade discounts in the Cash Book (they belong in the Sales Ledger).
- Ignoring unpresented cheques or bank charges in reconciliation.

Summary Flowchart: Accounting Cycle with Cash Book

flowchart LR
    A["Transactions Occur"] --> B["Record in Cash Book"]
    B --> C["Post to Ledger"]
    C --> D["Prepare Trial Balance"]
    D --> E["Bank Reconciliation"]
    E --> F["Final Accounts"]
    F --> G["Financial Statements"]

Final Checklist for Cash Book Preparation

✅ Date, Particulars, and Amounts must be complete. ✅ Contra entries must balance (Cash = Bank). ✅ Discounts must be recorded separately in triple-column books. ✅ Totals and Balances must match. ✅ Bank Reconciliation must explain all differences.

cash register machine A traditional cash register used in retail shops (Image: Public domain, via Wikimedia Commons) A bank passbook showing deposits and withdrawals (Image: self-scanned, Public domain, via Wikimedia Commons)

Based on the PU BBA (PU) syllabus for Financial Accounting I, unit 7.

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