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Double Entry System 2

Double Entry System 2. DR. CR. CASH BOOK. Objectives At the end of the lesson, students should be able to :. know what is the purpose of a Cash Book. draw up a Two-column and a Three-column Cash Book. distinguish between a cash and a trade discount. What is a Cash Book?.

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Double Entry System 2

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  1. Double Entry System 2 DR CR

  2. CASH BOOK

  3. Objectives At the end of the lesson, students should be able to : • know what is the purpose of a Cash Book. • draw up a Two-column and a Three-column • Cash Book. • distinguish between a cash and a trade discount.

  4. What is a Cash Book? • It forms part of the ledger book. • Contains only 2 ledger accounts: • - Cash account • - Bank account • It is a book of original entry without the • need to go through the Journal.

  5. Reduces the number of entries in the ledger book. One person can be in charge of the book, thus increasing efficiency. It is easier to refer to the Cash account and Bank account when using a separate book to record. Advantages of using a Cash Book

  6. Cr Dr Two-column Cash Book Date Particulars Cash Bank Date Particulars Cash Bank A Simple Two-column Cash Book

  7. Yourself father mum Tell A Story…

  8. Shopping Centre The list price is $60 What about $50? ok lah.

  9. TRADE DISCOUNT • The $60 is the list price. • The actual price that you paid was $50 • after bargaining. • The Trade Discount is the difference, $10. • Do you record the Trade Discount? NO!! • Why not? We are concerned with the final actual amount to be paid for, not the original list price or the discount given after bargaining.

  10. CASH DISCOUNT • Cash Discount, however, is to encourage early • payment from debtors. • It is dependent on how early a debtor pays his debt. • The earlier, the higher the amount of cash discount • will be given. • Unlike Trade Discount, Cash Discount is recorded in • the books. • Discount Received- If the firm received a discount for • early payment to creditors. • Discount Allowed- If the firm allowed a discount on • their debtors for early payment.

  11. A Simple Three-column Cash Book Cr Dr Three-column Cash Book Date Particulars DA Cash Bank Date Particulars DR Cash Bank Discount Received Discount Allowed

  12. Discount Allowed: Dr Discount Allowed Cr Debtors Discount Received: Dr Creditors Cr Discount Received

  13. Can you still remember what you have learnt today?

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