What is the Difference between Cash Book and Cash Account?
The cash book and the cash account record the cash transaction of the organization. Although the cash book and cash account seem to be the same thing, there are considerable differences between them in practical terms.
It is discussed below:
- The book of accounts in which cash, bank, and discount transactions are recorded in chronological order under the heading “cash book” is called cash book. On the other hand, all cash transactions are recorded in chronological order under the heading “cash account”, called the cash account.
- The cash book is called a journalized ledger. On the other hand, a “cash account” is called a ledger account as it contains the characteristics of a ledger.
- In addition to cash accounts, the cash book also includes bank accounts and discount accounts. On the other hand, Cash Accounts do not include accounts other than cash transactions.
- There are seven columns on both sides of the treble column cash book for a total of 14 columns. On the other hand, according to the cash account, there are four columns on each side for a total of eight columns.
- It is good to be able to explain the transactions recorded in the cash book, but it is not mandatory. On the other hand, it is not necessary to explain that since the cash account transferred directly from the journal.
- The journal page is not written in the cash book. On the other hand, the journal page is written as a cash account.
- Creating cash books saves the organization time. Since the cash book is considered a journal, there is no need to record the journal separately. On the other hand, the organization has to spend time and labour preparing cash accounts because the accounts are recorded under a separate heading for each cash transaction.
- We can know the amount of cash receipt and payment of the organization, the amount of receipt and payment of the bank, etc. from the cash book. On the other hand, we can only know the cash receipts and payments from the cash accounts.
- The cash column of the cash book always shows the debit balance. Sometimes it can show zero balance, but it can never show a credit balance. However, here the bank column can disclose debit or credit balance. On the other hand, the cash account shows a debit or zero balance.
From the above discussion, we can say that a cash book is an alternative to a cash account, but a cash account is not an alternative to a cash book because if you prepare a cash book, you don’t have to prepare a cash account, but if you prepare a cash account, you have to prepare a cash book because it remains a banking column activity.
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