if cash is involved in a business transaction how is it recorded?

Expert Solution

Answer:- If cash is involved in a business transaction, its recording in the books of accounts will be dependent upon:-

1. If Subsidiary Books are maintained in the business:-

Where subsidiary books are maintained in a business, the cash transactions are recorded in a Cash Book. The Cash Book is maintained in a ledger account format and has a both debit and credit side. A Cash Book is a subsidiary book and is both a journal as well as a ledger. The recording aspect as well as the posting aspect are complete when a transaction is entered in the Cash Book. Recording an entry in Cash Book is equal to writing the journal entry as well as posting into the ledger. There are three types of Cash Books:-

1. Single Column

2. Double Column

3. Triple Column

2. If Subsidiary books are not maintained in the business:-

The cash transactions will be recorded in General Journal if no subsidiary books are maintained. All cash transactions will be recorded in the journal using journal entries and will be posted therefrom into the ledger accounts namely Cash Account/Bank Account.

ekkarill92 answered 1 year ago

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