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Cash book with discount column:
- What is a cash book?
The book which records all cash transactions according to the date they were made is called a ‘cash book’.
- What is a cash discount?
Cash discount is that which is given to customers as an enticement to clear their accounts promptly. The body which is offering it will accept a lesser sum in full settlement, provided payment is cleared within the given timeframe.
- What is a two column cash book?
A double column cash book or two column cash book has two separate columns both on the debit side and credit side to record cash and discount. In many places it is customary for the trader to permit or to receive small discount against dues. These allowances are only for prompt settlements.
To evade pointless postings separate columns in the cash book have been introduced to note both discounts received and given. The discount column on the debit side of records discounts allowed and the one on the credit side, discounts received.
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Problems faced by students:
This requires not only a lot of number crunching but also the ability to post and interpret the cash book. The concept is vast and discount column is there in both two column and three column cash books. Without understanding the concept, it is impossible to attempt an assignment.
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Topics covered by us:
- How to write a treble and double column cash book
- Contra entries
- Double column cash book vs. triple column cash book
- Types of cash book
- Cash discount vs. trade discount
- Balancing discount columns
- Effects of granting cash discounts
- Posting
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