If a cash book is prepared then there is no need toprepare the _______...
A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. Entries in the cash book are then posted into the general ledger.
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If a cash book is prepared then there is no need toprepare the _______...
Yes it is correct .... if cash book is prepared there is no need to prepare the bank and cash account ....... because cash book consist of both the bank and cash account so there is no need to prepare a separate account for this......
If a cash book is prepared then there is no need toprepare the _______...
Explanation:
The cash book is a primary book of accounting where all cash transactions are recorded. It serves as a subsidiary book, and its purpose is to keep track of all cash inflows and outflows. It records both cash receipts and cash payments.
Advantages of Cash Book:
- It helps in maintaining a proper record of all cash transactions.
- It provides a ready source of information about cash receipts and payments.
- It helps in reconciling the bank statement and identifying any discrepancies.
- It facilitates the preparation of the cash flow statement.
- It serves as a basis for preparing other financial statements.
Integration with Other Books:
- Cash Book and Cash Account:
- The cash account is a part of the general ledger that summarizes all cash transactions recorded in the cash book. It provides a cumulative record of cash receipts and payments over a specific period.
- Since the cash book already records all cash transactions, there is no need to prepare a separate cash account in the general ledger.
- Cash Book and Journal Proper:
- The journal proper is used to record transactions that do not fit into any other specialized journal. It includes entries like rectification of errors, adjusting entries, and closing entries.
- As the cash book captures all cash transactions, including those that would typically be recorded in the journal proper, there is no need to prepare a separate journal proper.
- Cash Book and Purchases (Journal) Book:
- The purchases journal is used to record all credit purchases of goods. It helps in maintaining a record of purchases separately from other transactions.
- Since the cash book only records cash transactions, it does not include credit purchases. Therefore, a separate purchases journal is still necessary to record credit purchases.
- Cash Book and Sales (Journal) Book:
- The sales journal is used to record all credit sales of goods. It helps in maintaining a record of sales separately from other transactions.
- Similar to the purchases journal, the cash book only records cash transactions and does not include credit sales. Therefore, a separate sales journal is still necessary to record credit sales.
Conclusion:
In conclusion, when a cash book is prepared to record all cash transactions, there is no need to separately prepare the cash account in the general ledger. However, other specialized journals like the purchases journal and sales journal are still required to record credit transactions. Additionally, the journal proper is used for entries that do not fit into any other specialized journal.