Accounting explained
Cash Book: Meaning, Format and Example
The cash book records every rupee that comes into and goes out of the business in cash or through the bank, in date order. It is both a journal and a ledger: it records transactions first, and it shows the running balance of cash and bank.
Types of cash book
| Type | Columns on each side | Used for |
|---|---|---|
| Single column | Cash | Very small businesses dealing only in cash |
| Double column | Cash and bank | Most shops today |
| Triple column | Discount, cash and bank | Businesses that allow or receive cash discounts |
| Petty cash book | Small expenses by type | Tea, courier, stationery, auto fares |
Worked example: three days at Sri Lakshmi Stores (double column)
| Date | Particulars | Cash in (₹) | Bank in (₹) | Cash out (₹) | Bank out (₹) |
|---|---|---|---|---|---|
| 2 Mar 2026 | Opening balance | 12,000 | 1,48,000 | ||
| 2 Mar | Cash sales | 38,500 | |||
| 2 Mar | UPI and card sales | 41,200 | |||
| 3 Mar | Cash deposited in bank (contra) | 35,000 | 35,000 | ||
| 3 Mar | Paid Sri Ganesh Agencies by NEFT | 60,000 | |||
| 4 Mar | Electricity bill by UPI | 4,000 | |||
| 4 Mar | Received from Vidya PG Hostel | 21,000 | |||
| 4 Mar | Shop expenses in cash | 1,500 | |||
| 4 Mar | Closing balance | 14,000 | 1,81,200 | ||
| Totals | 50,500 | 2,45,200 | 50,500 | 2,45,200 |
Cash: 12,000 + 38,500 − 35,000 − 1,500 = 14,000. Bank: 1,48,000 + 41,200 + 35,000 + 21,000 − 60,000 − 4,000 = 1,81,200.
Contra entries
When cash is deposited in the bank or withdrawn from it, both sides of the entry are in the cash book: cash goes out and bank comes in. Such entries are marked "C" for contra. They move money between your own accounts and do not change income or expenses.
Petty cash
Small daily expenses are easier to manage from a petty cash float. Under the imprest system, a fixed float, say ₹5,000, is given to one person. At the end of the week the vouchers are totalled, the expenses recorded, and the float is topped back up to ₹5,000. The float should always equal cash in hand plus vouchers.
Common mistakes
- Not counting the cash drawer against the cash book at closing
- Mixing the owner's personal cash with the shop's
- Recording UPI sales as cash, which hides them from the bank reconciliation
- Paying suppliers from the till without a voucher
- Letting the cash book show a negative balance, which is impossible and means a missing entry
Daily closing routine
At closing time, count the drawer, write the count on the day's cash sheet, and compare it with the cash book balance. Small differences go to a cash over and short account with a note; repeated or large differences need an explanation. Deposit surplus cash in the bank the next morning as a contra entry, keeping a fixed float for change. Over a year this habit catches most till errors before they become a mystery at year end.
Key terms on this page
- Contra entry: a transfer between cash and bank, recorded on both sides of the cash book
- Imprest: a fixed petty cash float, topped up after each period
- Folio: the reference to the ledger page or account code
- Cash over and short: an account for small, unexplained differences in the till
About the worked example
The examples on our accounting pages follow one shop through one year: Sri Lakshmi Stores, a kirana in Mysuru owned by Ramesh, for the financial year 2025-26. It sold ₹48 lakh of goods (before GST), made a gross profit of ₹10.4 lakh and a net profit of ₹4.7 lakh, and ended the year with a balance sheet total of ₹7.95 lakh. The figures are illustrative but they add up across every page, so you can follow one transaction from the journal to the balance sheet.
How TripleBill handles it
TripleBill keeps cash, petty cash and bank accounts under Cash & Bank, records contra transfers between them, and has a day book and cash-flow report. POS sales go to cash, UPI or card as you take them, so the drawer can be counted against the system at closing.
General information on bookkeeping, not accounting or tax advice. For your final accounts and filings, consult a chartered accountant.
Last reviewed
Last reviewed: November 2026.
Frequently asked questions
What is a cash book?
A book that records all cash and bank receipts and payments in date order, with running balances.
Is a cash book a journal or a ledger?
Both. It is a book of original entry and also serves as the ledger for cash and bank accounts.
What is a triple column cash book?
A cash book with discount, cash and bank columns on each side.
What is a contra entry?
An entry where both sides are in the cash book, such as depositing cash in the bank.
Can the cash balance be negative?
No. A negative cash balance means an entry is missing or wrong.
What is the difference between a cash book and a day book?
The cash book records only cash and bank movements; a day book lists every transaction of the day, including credit sales and purchases.
Do UPI receipts go in the cash column?
No. UPI money lands in the bank account, so it goes in the bank column, or in a separate UPI or wallet account that is reconciled with the bank.
Who should write the cash book?
Ideally someone other than the person handling the cash, or at least checked by the owner each day.
Do I still need a cash book if most sales are digital?
Yes, for the cash you do handle, and the bank columns still need reconciling with the statement. Digital payments make the bank side bigger, not the record unnecessary.
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