Is cash book both a journal and ledger?

-This question was submitted by a user and answered by a volunteer of our choice.

Yes, the cash book is both a journal and a ledger. 

To make the concept simpler, I would like to familiarize you with the meaning of journals and ledgers, which shall help in determining the reasons for a cashbook to be both a journal as well as a ledger.

 

Journal

A journal is a descriptive financial record of a business that is used for future reconciling as well as a transfer to other books of accounts such as the ledger. It is a book of original entries.

Cashbook is considered to be a journal because all the cash/bank receipts and payments are recorded in this book in a descriptive form similar to journal posting.

 

Ledger

In simple words, a ledger refers to recording individual accounts in a summarized form that are posted from a journal. It is a book of principal entry.

A cashbook is considered to be a ledger because all the cash transactions that are made during a particular financial period are recorded in this book in a chronological order. When a cashbook is prepared there is no need for a cash a/c as the book serves the same purpose and therefore can be used as a substitute.

 

Format of a Cashbook

Cashbook

Date Particulars V.No. L.F. Cash Date Particulars V.No. L.F. Cash
To Capital a/c By Advertisement a/c
To Sales a/c By Purchases a/c
To Mr C’s a/c By Stationery a/c
To Bank a/c By Office expenses a/c
By Rent a/c
By Salary a/c
By balance c/d

Note: As we can see the format and posting of a cashbook are similar to that of journal and ledger accounts.