Cash book explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The cash book is both a book of original entry and a ledger account. Every receipt and payment of cash, and of bank money, is written in it as it happens, so its balances can be read at any time and checked against the cash in the drawer and the bank statement. This guide covers the three column formats, contra entries and the petty cash book kept on the imprest system. Our bookkeeping and online accounting team keeps these for clients every day.
A single column cash book has one cash column; a double column adds bank; a triple column adds a discount column as well. A contra entry moves money between cash and bank and is written on both sides of the same book. A petty cash book on the imprest system starts with a fixed float and is topped up by exactly what was spent, so that the float is restored at each period end.
The three formats
| Format | Columns | Used when |
|---|---|---|
| Single column | Cash only | A small business with no bank account activity |
| Double column | Cash and bank | Receipts and payments pass through both |
| Triple column | Discount, cash and bank | Cash discount is allowed or received on settlement |
The debit side holds receipts and the credit side payments. Each side has a date, particulars and the amounts. The cash column can never show a credit balance, because a business cannot pay out more cash than it holds; the bank column can show a credit balance only if the account is overdrawn.
Discount columns
The discount column on the debit side holds discount allowed to customers on prompt payment, and on the credit side discount received from suppliers. The two columns are not balanced; they are totalled. At the period end the debit total goes to the debit of Discount Allowed Account and the credit total to the credit of Discount Received Account. The party's account is credited with cash plus discount when a customer pays, and debited with cash plus discount when a supplier is paid. Trade discount does not come into the cash book at all; see subsidiary books.
Contra entries
A contra entry is a transaction where both debit and credit sides are cash and bank. Depositing cash in the bank is a debit in the bank column and a credit in the cash column, on the same date. Withdrawing for office use is the reverse. Both entries are marked "C" in the folio column and are not posted to the ledger, since the cash book is itself the ledger for cash and bank.
Posting from the cash book
| Cash book line | Posted to |
|---|---|
| Receipt from a customer | Credit the customer's account |
| Payment to a supplier | Debit the supplier's account |
| Cash sale or expense | Credit Sales or debit the expense |
| Discount columns | Totals to Discount Allowed and Discount Received accounts |
| Contra | Not posted |
Limits on cash payments and cash receipts under tax law are not discussed here; see our income-tax guides.
Petty cash book and the imprest system
A petty cashier handles small day-to-day payments, so that the main cashier is not interrupted. On the imprest system, the head cashier gives the petty cashier a fixed float. During the period the petty cashier records each payment in an analytical (columnar) petty cash book, with a column for each type of expense. At the period end the book is totalled and the head cashier reimburses the exact amount spent, restoring the float. The petty cash balance at the start of each period is therefore always the same.
Worked example: one week of Naik Auto Spares
The entity and all figures in this example are invented for illustration.
Naik Auto Spares opens the week of 1 to 7 June 2026 with cash of 20,000 and a bank balance of 1,50,000.
- 1 Jun: cash sales of 30,000.
- 1 Jun: a cheque for 25,000 from Desai Garage, after cash discount of 500 allowed, is banked.
- 2 Jun: cash of 20,000 is deposited in the bank (contra).
- 3 Jun: a supplier, Pillai Suppliers, is paid 40,000 by cheque and gives discount of 800.
- 4 Jun: rent of 8,000 is paid in cash.
- 5 Jun: 10,000 is withdrawn from the bank for office use (contra).
- 6 Jun: wages of 6,000 are paid in cash.
- 7 Jun: Menon Motors pays 12,000 in cash after discount of 200 allowed.
- 7 Jun: insurance of 5,000 is paid by cheque.
- 7 Jun: the petty cashier is reimbursed 1,800 (below).
Triple column cash book
| Date | Particulars (Dr) | Disc | Cash | Bank | Date | Particulars (Cr) | Disc | Cash | Bank |
|---|---|---|---|---|---|---|---|---|---|
| 1 Jun | To Balance b/d | 20,000 | 1,50,000 | 2 Jun | By Bank (C) | 20,000 | |||
| 1 Jun | To Sales | 30,000 | 3 Jun | By Pillai Suppliers | 800 | 40,000 | |||
| 1 Jun | To Desai Garage | 500 | 25,000 | 4 Jun | By Rent | 8,000 | |||
| 2 Jun | To Cash (C) | 20,000 | 5 Jun | By Cash (C) | 10,000 | ||||
| 5 Jun | To Bank (C) | 10,000 | 6 Jun | By Wages | 6,000 | ||||
| 7 Jun | To Menon Motors | 200 | 12,000 | 7 Jun | By Insurance | 5,000 | |||
| 7 Jun | By Petty cash | 1,800 | |||||||
| 7 Jun | By Balance c/d | 36,200 | 1,40,000 | ||||||
| Total | 700 | 72,000 | 1,95,000 | Total | 800 | 72,000 | 1,95,000 |
Working. Cash: receipts 20,000 + 30,000 + 10,000 + 12,000 = 72,000; payments 20,000 + 8,000 + 6,000 + 1,800 = 35,800; balance 72,000 - 35,800 = 36,200. Bank: receipts 1,50,000 + 25,000 + 20,000 = 1,95,000; payments 40,000 + 10,000 + 5,000 = 55,000; balance 1,95,000 - 55,000 = 1,40,000. The discount columns are not balanced: 700 goes to Discount Allowed Account (debit) and 800 to Discount Received Account (credit). Desai Garage is credited 25,500 and Menon Motors 12,200 in their ledger accounts; Pillai Suppliers is debited 40,800.
Petty cash book (imprest 2,000)
| Date | Particulars | Receipts | Total payment | Postage | Refreshments | Conveyance | Stationery | Repairs |
|---|---|---|---|---|---|---|---|---|
| 1 Jun | To Balance b/d | 2,000 | ||||||
| 2 Jun | By Postage stamps | 300 | 300 | |||||
| 3 Jun | By Tea and snacks | 450 | 450 | |||||
| 4 Jun | By Auto fare | 500 | 500 | |||||
| 5 Jun | By Stationery | 350 | 350 | |||||
| 6 Jun | By Shutter repair | 200 | 200 | |||||
| Total spent | 1,800 | 300 | 450 | 500 | 350 | 200 | ||
| 7 Jun | To Cash (reimbursement) | 1,800 | ||||||
| 7 Jun | By Balance c/d | 2,000 | ||||||
| Total | 3,800 | 3,800 | ||||||
| 8 Jun | To Balance b/d | 2,000 |
Check. Petty cash: payments 300 + 450 + 500 + 350 + 200 = 1,800; receipts 2,000 + 1,800 = 3,800 equal payments 1,800 + balance 2,000 = 3,800. The 1,800 is the credit in the main cash book and the debits go to the five expense heads shown in the columns. Cash book: both cash columns total 72,000 and both bank columns total 1,95,000.
Common mistakes
- Posting a contra to the ledger: it is already in the cash book.
- Balancing the discount columns: they are totalled, not balanced.
- Showing cash as a credit balance: an error somewhere, since cash cannot be negative.
- Topping up the imprest by guess: the reimbursement must equal the amount spent.
- Entering cheques as cash: a cheque banked goes to the bank column.
Need help with the cash book and petty cash?
If your cash book does not agree with physical cash or the bank statement, or your petty cash float is never restored, we can reconstruct and reconcile it. Our bookkeeping and online accounting service handles daily entries, petty cash vouchers and the monthly check.
Key takeaways
- Single, double and triple column books carry cash, bank and discount.
- Contra entries sit on both sides of the cash book and are not posted further.
- Discount columns are totalled and posted to the discount accounts.
- Imprest petty cash is restored by exactly the amount spent.
- Cash cannot show a credit balance; bank can only if overdrawn.
Read next
- Subsidiary books of accounts
- Bank reconciliation statement
- Ledger posting and balancing
- What is petty cash
Disclaimer: Based on the Accounting Standards issued by the Institute of Chartered Accountants of India as on 1 April 2025, the Companies (Accounting Standards) Rules, 2021 as amended up to G.S.R. 169(E) of 10 March 2026, the Companies Act, 2013 and the ICAI guidance named in the article, as consulted on 4 October 2026. The worked example uses invented figures. Later amendments should be checked on icai.org and mca.gov.in. This article is general information, not legal advice; check the official text before acting.