25 Short Questions and Answers-Cash Book [With PDF]

Today we’ll learn about “25 Short Questions and Answers-Cash Book.” In any business organization, the importance of a cash book is immense.

Business and cash are inextricably related. Cash is ultimately necessary for any sphere of business.

Businesses prepare cash books according to the nature and size of the company.

You’ll get a basic concept of the cash book if you read this article from top to bottom.

It will definitely help you do well on any kind of competitive examination.

For theory read these articles:

• Cash Book: Meaning, Features, and importance
• Read! Why Cash Book Is Both A Journal And A Ledger?

So, let’s get started.

Short Questions and Answers-Cash Book

Question-01: What is Cash book?

Answer: Cash book is a book in which an account is kept of the receipts and disbursements of money.

Question-02: What are the features or characteristics of the cash book?

Answer: The important features or characteristics of the cash book are as follows:

• All transactions are recorded on the debit side of Cash book while the payments are recorded on the Credit side.
• Cash book is known as the primary book of accounts.
• It is possible to know how much cash has been received and paid against different sources in a particular period.
• It is possible to know the cash balance by identifying the difference between cash received & cash paid.

Question-03: What are the benefits or importance of a cash book?

Answer: The benefits or importance of a cash book are as follows:

• Knowing about cash receipts and payments.
• Knowing the amount of cash in hand.
• Advantage of getting any information about the cash transaction.
• Finding misappropriation of cash
• To reduce the Journal entry.
• Determine the cash fund on a daily basis.

Question-04: How many types of cash books are there, and what are they?

Answer: The cash books that have been used for a long time are of four (4) types, which are as follows:

1. Single Column Cash Book
2. Double Column Cash Book
3. Treble Column Cash Book
4. Petty Cash book

Nowadays some organizations are preparing the following journal to calculate cash receipts and cash payments separately instead of the traditional cash book.

• Cash Receipt Journal
• Cash Payment Journal

Question-05: What’s a single-column cash book?

Answer: A cash book with only one column of money on the debit and credit side to record the only amount of cash transactions is called a single column cash book. Comparatively small business prepares a single column cash book.

Question-06: What’s a Double Column Cash Book?

Answer: A cash book with two columns of money on the debit and credit side to record the amount of cash and bank transactions is called a double column cash book. The organization that deals with both cash and bank transactions prepare a double-column cash book.

Question-07: What’s a Treble Column Cash Book?

Answer: A cash book with three columns of money on the debit and credit side to record the amount of cash, bank, and discount transactions is called the Treble Column Cash Book.

Question-08: What is a Petty cash book?

Answer: The book in which the expenses of a small amount are written is called a petty cash book.

Question-09: What is the necessity of a Petty Cash book?

Answer: the necessity of a Petty Cash book is as follows:

• Reducing the pressure of work of the head cashier.
• Reducing the volume of the cash book.
• Saving time and labor.
• Reducing errors and omissions.
• Controlling the petty expenses.

Question-10: What is a contra entry?

Answer: The transactions that influence both the cash as well as the bank account are known as contra entry.

Question-11: What is a discount?

Answer: A discount is an amount that the seller receives less from the buyer than the selling price of the product.

Question-12: How many types of discounts are there and what are they?

Answer: There are two types of discounts which are as follows:

1. Cash Discount
2. Trade Discount

Question-13: What is the cash discount?

Answer: In order to collect the amount for the number of goods sold on credit quickly, the seller allows the buyer this kind of discount. This discount is known as the cash discount.

Questions-14: What is a Trade Discount?

Answer: When the manufacturer or wholesaler of a product gives the retailer a discount at a fixed rate on the price indicated in the price list of the product sold, that discount is called a trade discount.

Question-15: Why does not trade discount accounted for?

Answer: Because the trade discount doesn’t change the financial condition of the Seller and the buyer. 

Question-16: What is a Cash Receipt Journal?

Answer: The cash receipt journal records all cash and cash equivalent receipts transactions in order to know the total cash inflow for a specific period of time.

Question-17: What is the cash payment Journal?

Answer: Cash Payment journal records all cash and cash equivalent payment transactions in order to know the total cash outflow for a specific period of time.

Question-18: Is the Cash book a journal or ledger?

Answer: The Cash book is both journal and ledger.

Question-19: What balance does the cash book always denote?

Answer: The cash book always denotes “Debit Balance”.

Question-20: What does the credit balance of the bank column indicate?

Answer: The credit balance of the bank column indicates “Bank Overdraft.”

Question-21: How many columns are available in different types of cash books?

Answer: The columns are available in different types of cash books are as follows:

• Single column cash book- 10 Columns
• Double column cash book- 12 columns
• Treble column cash book- 14 columns

Question-22: On what basis are cash books made?

Answer: cash books are made on a daily basis.

Question-23: Bank charges and interest are recorded on which side of the cash book?

Answer: Bank charges and interest are recorded on the debit side of the cash book.

Question-24: Discount received and discount payment is recorded in which cash book?

Answer: Discount received and discount payment is recorded in “Treble column cash book.”

Question-25: What is known through the cash book?

Answer: Daily cash and bank balance are known through the cash book.

I hope you’ve got the basic idea of a cash book at the end of the article. If you read these “25 short questions and answers-Cash Book” regularly, your accounting skills will definitely be enhanced.

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You may also read:

Short Questions and Answers:

1. Introduction to Accounting
2. Transaction
3. Account
4. Double Entry System
5. Accounting Cycle
6. Journal
7. Ledger
8. Bank Reconciliation Statement
9. Trial Balance
10. Financial Statements
11. Receivables
12. Accounting Principles
13. Plant Assets and Depreciation