In this article, we will learn in-depth about why a cash book is both a journal and a ledger, and much more.
A Cash book is both a journal and a ledger
Before you start, you can read this article. Cash Book: Meanings, Features, and Importance.
Reasons for the Cash Book is a Journal
The cash book contains the majority of the features of the journal, which is why it is referred to as the journal.
The following are the reasons why a cash book is called a journal.
- In a cash book like journal, the transactions are recorded in chronological order.
- The cash book, like the Journal, is referred to as a subsidiary accounting book. This is due to the fact that basic transactions can be transferred to the Ledger.
- The cash book, like the journal, includes an explanation of the transaction.
- Transactions from the cash book are also recorded in a ledger.
- Both the Journal and the Cash Book have a column called “Ledger Page.” The cash book and journal both use the same accounting method, which is the double-entry accounting system.
- The cash book, like the journal, is referred to as the primary accounting book. Because the transactions that occur here are primarily and fundamentally recorded.
Reasons for the Cash Book is a Ledger
The cash book is a ledger. Cash book has many of the same features as a ledger account, which is why it is also known as a ledger.
The following are the reasons why the cash book is called the ledger:
- In Cash Books, like Ledger, there are two sides: debits and credits.
- The cash book, like a ledger, is also known as the final and permanent book of accounts. Because the Cash Book serves all of the functions of the Ledger.
- In the same way that Ledger transactions are transferred to the trial balance, cash book transactions are also transferred to the trial balance.
- The cash balance is calculated from the difference between the debit and credit cash columns in the cash book, and the cash balance is shown as a ledger balance in the financial statement.
- A ledger and a cash book have the same basic structure. And It is not necessary to prepare a cash account separately when preparing a cash book.
The cash book is called both a journal and a ledger, according to the above discussion, but the reasoning for calling them a ledger is stronger. Because the format, transaction recording, balance calculation, and accounting activities of a cash book are similar to those of a ledger.
As a result, many modern accounting experts have observed both journal and ledger activity in the cash book.
As a result, the cash book is referred to as a “Journalized Ledger.”
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