Double and Triple Column Cash Books

In the previous chapter, "What is a Cash Book?", we looked at the simple, single-column cash book. It did one job perfectly: it tracked the physical cash moving in and out of a business's cash drawer.

But think about how a real business operates today. If you run a store, you don't just deal in crisp currency notes. You receive cheques from customers. You make NEFT or RTGS transfers to your suppliers. You pay your electricity bill via UPI. Furthermore, to encourage customers to pay you quickly, you might offer them a small discount.

A simple cash book cannot handle bank transactions or discounts. If you only use a single-column cash book, you would have to maintain a completely separate journal for your bank account and another one for your discounts. That means more paperwork, more flipping through pages, and a higher chance of making a mistake.

To solve this, accountants simply added more columns to the cash book. By adding a "Bank" column, we get the Double Column Cash Book. By adding both a "Bank" and a "Discount" column, we get the ultimate all-in-one tool: the Triple Column Cash Book.

In this chapter, we are going to build these books from scratch. We will learn how to record transactions that move money between your cash drawer and your bank account, how to handle discounts, and the very specific rules for closing these books at the end of the month.

The Double Column Cash Book (Cash + Bank)

Imagine you are wearing a jacket with two pockets. The left pocket holds your physical cash. The right pocket holds your debit card, representing your bank balance. Both pockets belong to you, and both hold your purchasing power, but they are physically separate.

A Double Column Cash Book works exactly like this. It is a single ledger book, but on both the Debit (Receipts) side and the Credit (Payments) side, it has two amount columns instead of one: a Cash column and a Bank column.

Here is what the structure looks like on a single page:

Debit Side (Receipts - Money coming IN)

• Date: When the money was received.
• Particulars: Who paid us, or why we received it.
• L.F. (Ledger Folio): The page number of the corresponding account in the ledger.
• Cash (₹): Amount received in physical cash.
• Bank (₹): Amount received directly into the bank (cheques, online transfers).

Credit Side (Payments - Money going OUT)

• Date: When the money was paid.
• Particulars: Who we paid, or what expense we settled.
• L.F. (Ledger Folio): The page number of the corresponding account in the ledger.
• Cash (₹): Amount paid in physical cash.
• Bank (₹): Amount paid directly from the bank.

When a customer pays you ₹5,000 in cash, you write it on the Debit side in the Cash column. If another customer transfers ₹10,000 to your bank account, you write it on the Debit side, but in the Bank column. It is beautifully simple: you just put the number in the column that matches where the money actually went.

The Magic of Contra Entries

Because the Double Column Cash Book tracks both your cash drawer and your bank account in the same place, we run into a fascinating situation when money moves between the two.

Suppose you have too much physical cash in your store's drawer, so you take ₹10,000 and deposit it into your business bank account. What just happened?

1. 1Your physical cash balance went down by ₹10,000.
2. 2Your bank balance went up by ₹10,000.

In traditional double-entry bookkeeping, the journal entry for this is: Bank A/c ... Dr. ₹10,000 To Cash A/c ... ₹10,000

Notice that both the Debit aspect (Bank) and the Credit aspect (Cash) belong inside the Double Column Cash Book! You don't need to go to any other ledger account to record this. The entire transaction begins and ends right here on this one page.

This is called a Contra Entry.

How to Record a Contra Entry

Let's walk through exactly how to record the example above: depositing ₹10,000 cash into the bank.

To tell anyone reading the book that this is a self-contained transaction that doesn't need to be posted anywhere else, we write a capital 'C' in the L.F. (Ledger Folio) column on both sides.

The Two Types of Contra Entries

There are only two standard transactions that result in a contra entry:

1. 1Depositing cash into the bank: (Bank balance increases, Cash balance decreases).
2. 2Withdrawing cash from the bank for office use: (Cash balance increases, Bank balance decreases).

The Triple Column Cash Book (Cash + Bank + Discount)

Now we take the final step. Businesses often grant discounts to customers who pay their bills promptly, and they receive discounts from suppliers when they pay their own bills early.

To track these cash discounts without opening a separate journal, we add a third amount column on both sides of the cash book: the Discount column.

The Debit Side: Discount Allowed

When a customer owes you ₹1,000, but you tell them, "Pay me ₹950 right now and we'll call it even," you have allowed a discount of ₹50.

• You receive ₹950 in cash.
• You suffered a "loss" or expense of ₹50 to get that cash quickly.

Because expenses are debited, the Discount Allowed column lives on the Debit side of the cash book, right next to the cash you received.

The Credit Side: Discount Received

When you owe a supplier ₹2,000, and they let you settle the account for ₹1,900, you have received a discount of ₹100.

• You pay ₹1,900 in cash.
• You gained an income or profit of ₹100.

Because incomes are credited, the Discount Received column lives on the Credit side of the cash book, right next to the cash you paid out.

Handling Cheques: The Tricky Scenarios

Before we look at how to balance the book, we need to address how cheques are handled, because this is where students make the most mistakes.

Scenario 1: Cheque received and deposited on the SAME day. If you receive a cheque from Rahul for ₹5,000 and deposit it into the bank on the exact same day, it is simple. You debit the cash book and put ₹5,000 directly into the Bank column.

Scenario 2: Cheque received today, but deposited LATER. Suppose you receive a cheque from Rahul on Monday, but you keep it in your desk drawer and don't go to the bank until Wednesday.

• On Monday: Because the cheque is sitting in your physical drawer, accounting rules say you must treat it as physical cash. You debit the cash book and put ₹5,000 in the Cash column. (Some modern systems use a "Cheques in Hand" account, but in standard cash book problems, it is treated as Cash).
• On Wednesday: When you finally take that cheque to the bank, you treat it exactly like depositing physical cash. You must pass a Contra Entry ('C'). You credit Cash (because the cheque is leaving your drawer) and debit Bank (because the bank is receiving it).

Scenario 3: Dishonour of a Cheque (Bouncing) If a cheque you previously deposited bounces (is dishonoured by the bank), the bank will reverse the money out of your account. You must record this on the Credit side (Payments) in the Bank column, writing the customer's name in the particulars. If you had allowed them a discount when they gave you the cheque, that discount is now cancelled. However, you cannot record the cancelled discount in the cash book's credit side (because that column is for Discount Received from suppliers). The cancellation of the discount must be recorded separately in the Journal Proper.

The Art of Balancing the Columns

At the end of the month, we must close the cash book and find out our closing balances. This is where the three columns behave very differently from one another.

1. Balancing the Cash Column (Always a Debit Balance)

Cash is a Real Account. It represents a physical asset. You can have ₹10,000 in your drawer, or you can have ₹0 in your drawer. But you cannot have minus ₹5,000 in your drawer. You cannot physically spend more cash than you possess. Therefore, the Debit side (Receipts) of the Cash column will always be greater than or equal to the Credit side (Payments). To balance it:

1. 1Total the Debit cash column.
2. 2Total the Credit cash column.
3. 3Subtract the Credit total from the Debit total.
4. 4Write the difference on the Credit side as "By Balance c/d" (carried down) so both sides match.

2. Balancing the Bank Column (Can be Debit or Credit)

Bank is a Personal Account (it represents the banking institution). Unlike physical cash, a bank will sometimes let you spend more money than you have. This is called a Bank Overdraft—a short-term loan from the bank. Because of this, the Bank column can have either a Debit balance (you have money in the bank) or a Credit balance (you are overdrawn and owe the bank money).

• If Debit side > Credit side: You have a positive bank balance. You write "By Balance c/d" on the Credit side.
• If Credit side > Debit side: You have a bank overdraft. You write "To Balance c/d" on the Debit side.

3. Why the Discount Column is NEVER Balanced

This is the most important conceptual rule of the Triple Column Cash Book.

Why? Because the Cash columns on both sides represent the same thing (physical money). The Bank columns on both sides represent the same thing (your bank account).

But the Discount columns do NOT represent the same thing.

• The Debit discount column is Discount Allowed (an expense account).
• The Credit discount column is Discount Received (an income account).

You cannot subtract your incomes from your expenses inside the cash book. If you allowed ₹500 in discounts to your customers, and received ₹200 in discounts from your suppliers, you do not have a "net discount balance" of ₹300. You have ₹500 of expenses and ₹200 of income.

Therefore, at the end of the month, you simply add up the Debit discount column and write the total at the bottom. You do the same for the Credit discount column.

• The total of the Debit column is posted to the debit side of the "Discount Allowed Account" in the general ledger.
• The total of the Credit column is posted to the credit side of the "Discount Received Account" in the general ledger.

Worked Example: A Month in the Life of a Business

Let’s put everything together by recording a few transactions for "Sharma Traders" for the month of May 2026 in a Triple Column Cash Book.

The Transactions:

• May 1: Started the month with Cash Balance ₹15,000 and Bank Balance ₹40,000.
• May 4: Deposited ₹5,000 cash into the bank.
• May 10: Received a cheque from customer Priya for ₹9,500 in full settlement of her ₹10,000 account. Deposited it in the bank the same day.
• May 15: Paid supplier Vikram ₹4,800 by cheque, received a discount of ₹200.
• May 20: Withdrew ₹2,000 cash from the bank for office use.
• May 25: Paid electricity bill ₹1,000 in cash.
• May 31: Balanced the cash book.

Step-by-Step Walkthrough:

1. 1May 1 (Opening Balances):

Debit side. Particulars: "To Balance b/d". Cash column: ₹15,000. Bank column: ₹40,000.

1. 1May 4 (Contra Entry - Deposit):

Debit side: Particulars: "To Cash A/c". L.F.: 'C'. Bank column: ₹5,000. Credit side: Particulars: "By Bank A/c". L.F.: 'C'. Cash column: ₹5,000.

1. 1May 10 (Receipt with Discount):

Debit side. Particulars: "To Priya". Discount column: ₹500. Bank column: ₹9,500.

1. 1May 15 (Payment with Discount):

Credit side. Particulars: "By Vikram". Discount column: ₹200. Bank column: ₹4,800.

1. 1May 20 (Contra Entry - Withdrawal):

Debit side: Particulars: "To Bank A/c". L.F.: 'C'. Cash column: ₹2,000. Credit side: Particulars: "By Cash A/c". L.F.: 'C'. Bank column: ₹2,000.

1. 1May 25 (Cash Expense):

Credit side. Particulars: "By Electricity A/c". Cash column: ₹1,000.

Step 7: Balancing on May 31

Let's look at the Cash Column:

• Total Receipts (Debit): ₹15,000 (Opening) + ₹2,000 (Contra) = ₹17,000.
• Total Payments (Credit): ₹5,000 (Contra) + ₹1,000 (Electricity) = ₹6,000.
• Difference: ₹17,000 - ₹6,000 = ₹11,000.
• We write "By Balance c/d" on the Credit side, Cash column: ₹11,000. Both sides now total ₹17,000.

Let's look at the Bank Column:

• Total Receipts (Debit): ₹40,000 (Opening) + ₹5,000 (Contra) + ₹9,500 (Priya) = ₹54,500.
• Total Payments (Credit): ₹4,800 (Vikram) + ₹2,000 (Contra) = ₹6,800.
• Difference: ₹54,500 - ₹6,800 = ₹47,700.
• We write "By Balance c/d" on the Credit side, Bank column: ₹47,700. Both sides now total ₹54,500.

Let's look at the Discount Column:

• Debit side total: ₹500. (We just write 500 at the bottom).
• Credit side total: ₹200. (We just write 200 at the bottom).
• We do NOT balance them.

On June 1st, we will bring down the new balances on the Debit side: "To Balance b/d", Cash ₹11,000, Bank ₹47,700.

Quick Revision

• Double Column Cash Book: Contains Cash and Bank columns. It eliminates the need for a separate bank ledger account.
• Triple Column Cash Book: Contains Cash, Bank, and Discount columns.
• Contra Entry: A transaction involving both cash and bank (e.g., depositing cash, withdrawing for office use). It is marked with a 'C' in the L.F. column and is not posted to the ledger.
• Personal Use: Withdrawing cash from the bank for personal use is "Drawings", not a contra entry. It only appears on the credit side (Bank column).
• Discount Allowed: Recorded on the Debit side (an expense incurred to receive cash quickly).
• Discount Received: Recorded on the Credit side (an income gained by paying cash quickly).
• Balancing Cash: Always has a debit balance (or zero). You cannot have negative physical cash.
• Balancing Bank: Can have a debit balance (positive funds) or a credit balance (Bank Overdraft).
• Totaling Discounts: The discount columns are NEVER balanced against each other. They are merely totaled, and those totals are posted to their respective ledger accounts (Discount Allowed and Discount Received).