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Recording of Transactions - 2
briefly state how the cash book is both journal an...

Question:
Briefly state how the cash book is both journal and a ledger.

Answer:

Cash Book plays dual role as a book of original entry (or primary entry) as well as a ledger. It is a subsidiary book because all cash transactions are first recorded in the cash book and then from the cash book posted to various accounts in the ledger.

The Cash Book is also a ledger in the sense that it serves the purpose of a Cash A/c also. When a Cash Book is prepared, no separate Cash account is opened in the ledger. As such, the Cash Book is a journal as well as a ledger and hence it may be called ‘Journalised ledger’.

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Mr. Sunrise started a business for buying and selling of stationery with ₹ 5,00,000 as an initial investment. Of which he paid ₹ 1,00,000 for furniture, ₹ 2,00,000 for buying stationery items. He employed a sales person and clerk. At the end of the month he paid ₹ 5,000 as their salaries. Out of the stationery bought he sold some stationery for ₹ 1,50,000 for cash and some other stationery for ₹ 1,00,000 on credit basis to Mr. Ravi. Subsequently, he bought stationery items of ₹ 1,50,000 from Mr. Peace. In the first week of next month there was a fire accident and he lost ₹ 30,000 worth of stationery. A part of the machinery, which cost ₹ 40,000, was sold for ₹ 45,000.

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Question:
Briefly state how the cash book is both journal and a ledger.

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Question: Briefly state how the cash book is both journal and a ledger.

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Question:
Briefly state how the cash book is both journal and a ledger.