Cash book is a form ofa)Trial Balance.b)Journal.c)Ledger.d)All of the above.Correct answer is option 'C'. Can you explain this answer?

Question

Answer

Journal in which all cash receipts and payments (including bank deposits and withdrawals) are recorded first, in chronological order, for posting to general ledger. Cash book is regularly reconciled with the bank statements as an internal auditing measure. In larger firms, it is commonly divided into two parts: (1) Cash disbursement journal in which all cash payments (such as accounts payable, operating expenses, petty cash purchases) are recorded, and (2) Cash receipts journal in which all cash receipts (such as accounts receivable, cash sales, sale of assets) are recorded.

Answer

All cash transactions are primarily recorded in it as soon as they take place; so it is a journal (a book of original entry). On the other hand, the cash aspect of all cash transactions is finally recorded in the Cash Book (no posting in Ledger); so a Cash Book is also a Ledger (a book of final entry).

Answer

The correct answer is option 'C' - Cash book is a form of Ledger.

Explanation:
A cash book is a financial ledger that records all cash transactions, including both inflows and outflows of cash, for a particular period. It is used to maintain a record of cash receipts and payments made by an organization or individual.

A cash book serves as a subsidiary ledger to the general ledger, which is the main ledger that contains all the accounts and financial information of a business. The cash book provides a detailed breakdown of all the cash transactions, making it easier to track and reconcile the cash balance.

Let's understand why the other options are not correct:

a) Trial Balance: A trial balance is a list of all the accounts and their balances at a specific point in time. It is prepared to ensure that the total debits equal the total credits in the ledger, thereby ensuring the accuracy of the recorded transactions. A cash book is not a trial balance as it does not provide a summary of all accounts; rather, it focuses specifically on cash transactions.

b) Journal: A journal is a book of original entry that records all the transactions in chronological order. It is used to record the details of each transaction before they are transferred to the respective accounts in the ledger. A cash book is not a journal as it does not record all types of transactions; it only focuses on cash transactions.

c) Ledger: A ledger is a principal book that contains all the accounts and financial information of a business. It serves as a central repository for recording and summarizing transactions. A cash book is a form of a ledger because it records all cash transactions and provides a detailed breakdown of cash inflows and outflows.

Therefore, the correct answer is option 'C' - Cash book is a form of Ledger.

Similar CA Foundation Doubts

Cash book is a form of

Rs 500 received from sub-tenant for rent and entered correctly in the cash book is posted to the debit of the rent account. In the trial balance.

Financial position of the business is ascertained on the basis of a. Record prepared under book keeping process b. Trial balance c. Balance sheet d. All of the above?

A bank reconciliation statment reconciles the. (

Cash received from Ramesh Rs. 1,500isrecorded correctly in cash book, but debited tohis account. Because of this error

Top Courses for CA FoundationView all

Quantitative Aptitude for CA Foundation

Accounting for CA Foundation

Business Laws for CA Foundation

Business Economics for CA Foundation

Mock Tests & Past Year Papers for CA Foundation

Top Courses for CA Foundation

Top Courses for CA Foundation

Related Content

CA Foundation Courses

Other Courses

How To Prepare?

Other Exams

Company