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Cash book is a type of __________ but treated as a ____________ of accounts.
  • a)
    Subsidiary book, principal book
  • b)
    Principal book, subsidiary book
  • c)
    Subsidiary book, Subsidiary book
  • d)
    Principal book, Principal book
Correct answer is option 'A'. Can you explain this answer?
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Cash book is a type of __________ but treated as a ____________ of acc...
Cash Book as a Subsidiary Book and Principal Book

Cash book is a record of all cash transactions of a business. It is used to record receipts and payments of cash, bank and discount. It is a type of subsidiary book but treated as a principal book of accounts. Let's understand why.

Subsidiary Book

Subsidiary books are the books of original entry where the transactions are first recorded. These are also known as subsidiary ledger. The purpose of subsidiary books is to record specific types of transactions in a systematic way. Some examples of subsidiary books are purchases book, sales book, journal proper, etc.

Cash Book as a Subsidiary Book

Cash book is also a subsidiary book as it records cash and cash equivalent transactions. It is used to record all cash receipts and payments of a business. Cash book is divided into two parts - cash column and bank column. The cash column is used to record all cash transactions, while the bank column is used to record all bank transactions. Cash book is a book of original entry as it records transactions as they occur.

Principal Book

Principal books are the books of accounts where the transactions are finally recorded. These are also known as principal ledger. The purpose of principal books is to summarize the transactions recorded in subsidiary books and present the financial position of the business. Some examples of principal books are ledger accounts, trial balance, financial statements, etc.

Cash Book as a Principal Book

Cash book is also a principal book as it summarizes all cash and cash equivalent transactions of a business. It is used to prepare the cash account of a business, which is a part of the final accounts. Cash book is used to record all cash receipts and payments, which are then summarized in the cash account. Cash account is a part of the ledger accounts, which is a principal book.

Conclusion

In conclusion, cash book is a type of subsidiary book as it records cash and cash equivalent transactions. It is also a principal book as it summarizes all cash transactions and presents the financial position of a business. Therefore, the correct answer is option 'A'.
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Cash book is a type of __________ but treated as a ____________ of acc...
Cash transactions are quickly recorded in the cash book and on the basis of such a record, ledger a/c are prepared. So the cash book is a subsidiary book. But cash book have cash a/c&bank a/c & the balances directly entered in the trial balance so is part of ledger also. Hence it has also to be treated as the principal book.
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Cash book is a type of __________ but treated as a ____________ of accounts.a)Subsidiary book, principal bookb)Principal book, subsidiary bookc)Subsidiary book, Subsidiary bookd)Principal book, Principal bookCorrect answer is option 'A'. Can you explain this answer?
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