Bank Cash Book

Bank Cash Book is the cash book maintained by the operating level office of the government. The specimen for bank cash book is defined by AGF No 5. It is maintained according to double entry system of book keeping.

The transactions recorded in bank cash book can be broadly classified into following:

1. Cash transaction

Any transaction requiring collection and payment through cash are recorded in bank cash book. It rarely comes into use because transactions are completed through bank in government offices.

1. Bank transaction

The receipt and payment of funds through bank are recorded in bank cash book.

1. Budget Expenditure transactions

Bank cash book is used to record expenditure made under different budget heads.

1. Advance transactions

It is also used to record advance transactions involving both cash and banking instruments.

1. Miscellaneous transactions

Miscellaneous transactions like deduction of provident fund, receipt of revolving fund etc are also recorded in miscellaneous account.

The different columns of bank cash book are briefly discussed below:

1. Date Column

It is used to mention the date on which the transaction came into effect.

1. Reference Number

It shows the code number or journal voucher number.

1. Particulars Column

It is used to record the brief explanation of transaction. Like imprest fund received, paid advance etc.

1. Cash in Hand

It records the amount of cash received or paid in certain transactions.

1. Cash at Bank

It records amount of cheque collected or issued for any transaction.

1. Budget Expenditure

It is used to record the budget head no and budget expenditure amounts.

1. Advance account

This column is used to record the advance transactions like advance given and cleared.

1. Miscellaneous account

All the transactions excluding above mentioned ones are recorded in this column. For eg. budget release, provident fund etc.

The importance of bank cash book is discussed below:

1. To facilitate preparation of trial balance

The bank cash book provides closing balance of cash and bank accounts which helps in easy preparation of trial balance. It is of further help since it is prepared under dual aspects.

1. To ensure double entry system

AGF No 5 has provided such specimen which helps in easy and simple recording of transaction under double entry system of book keeping. The two different sides of same account must be equal to ensure arithmetical accuracy.

1. To avoid misuse of funds

The bank cash book facilitated for detailed recording of cash and bank transactions in transparent manner. This ensures that transactions are properly documented which avoids embezzlement.

1. To facilitate cash planning

Cash planning is very essential for regular and consistent operation of any office. Bank cash book shows the pattern of expenditure and receipt which helps in planning the cash requirements beforehand.

Important points that need to be taken into consideration while preparing a Bank Cash Book:

The following guideline can be followed for preparing a Bank Cash Book:

1. Prepare journal voucher before posting any transaction into bank cash book.

2. Those amounts that are debited and credited in journal voucher are entered in debit and credit side of appropriate column respectively.

3. Financial transaction related to cash, bank, advance and budget expenditure are recorded in allotted columns of bank cash book.

4. The transactions besides those mentioned in (c) are recorded in miscellaneous column.

5. Advance transactions are to be posted in 3 different accounts in bank cash book.

6. Imprest fund and budget release are the only transaction recorded as receipt in bank cash book.

7. Petty cash fund expenses are recorded in bank cash book only when reimbursements of such expenses are made.