The cash book, explained the simple way.

What is a cash book?

A cash book is a special-purpose book that records only cash and bank transactions — every rupee received on one side (debit) and every rupee paid out on the other (credit), in date order. It is one of the most useful books in the whole accounting system for a simple reason: it does two jobs at once.

First, it's a book of original entry — like the journal, a cash transaction is written here first, before anywhere else. Second, it's also a ledger account — it doubles up as the Cash account and the Bank account, so those two accounts are never opened separately in the ledger. Its running balance also tells you, at a glance, exactly how much cash is in the till and how much is in the bank right now.

The three types of cash book

Depending on what a business needs to track, a cash book comes in one of three forms — each simply adding one more column to the last.

A single column cash book is really just the Cash account written as a book — you'd use it if the business never touches a bank account, which is rare today. A double column cash book is what most businesses actually keep, because almost every business has both a till and a current account. A triple column cash book adds a discount column when cash discount is a regular part of trading (common in wholesale and distribution).

Contra entries — the one rule unique to a cash book

A contra entry happens when a transaction affects both cash and bank at once — the two most common examples are depositing cash into the bank, and withdrawing cash from the bank for office use. Because both halves of the double entry — the debit and the credit — live inside the same cash book (one on the cash column, one on the bank column), a contra entry is marked with the letter "C" in the L.F. (Ledger Folio) column on both sides, instead of a page number.

That "C" is a signal: this entry is already complete — do not post it anywhere else. Every other entry in the cash book (a sale, a payment of rent, a receipt from a customer) still needs its other half posted to that account in the ledger; only contra entries stay entirely self-contained within the cash book.

Live worked example — a double column cash book

Meet Sharma Traders, a small trading firm in Nagpur. Below is its double column cash book for April 2026, with two contra entries (marked C) — cash deposited into the bank on 5 April, and a cheque withdrawn for office cash on 18 April. Notice each contra entry appears twice: once on the debit side of one column, once on the credit side of the other.

Check the tie-out: on the Cash column, receipts of ₹20,000 + ₹35,000 + ₹25,000 (contra, cheque withdrawn 18 Apr) = ₹80,000 exactly match payments of ₹30,000 (contra, cash deposited 5 Apr) + ₹18,000 + ₹32,000 (balance carried down) = ₹80,000. On the Bank column, receipts of ₹1,50,000 + ₹30,000 (contra, cash deposited 5 Apr) + ₹40,000 = ₹2,20,000 exactly match payments of ₹12,000 + ₹25,000 (contra, cheque withdrawn 18 Apr) + ₹45,000 + ₹1,38,000 (balance carried down) = ₹2,20,000. Sharma Traders closes April with ₹32,000 in cash and ₹1,38,000 in the bank — both columns balance independently, which is exactly what should happen in a correct cash book.

Every entry here other than the contras still needs its opposite leg posted to the named account in the ledger — Sales A/c is credited ₹35,000, Ramesh A/c is credited ₹40,000, and so on. Only the "C" entries stay entirely inside this book.

Common mistakes & student tips

• Forgetting to mark contra entries with "C". If a transaction moves money between cash and bank and you post it to the ledger as well, you've double-counted it. The "C" tells you (and anyone checking your work) that this entry is already complete.
• Posting the cash/bank column to the ledger. Never open separate Cash or Bank ledger accounts when you keep a cash book — the cash book already is those accounts. Only the "other" account in each entry gets posted.
• Mixing up which side is which. Receipts (money coming in) always go on the debit (left) side; payments (money going out) always go on the credit (right) side — same rule as the golden rule for real accounts: debit what comes in, credit what goes out.
• Overdraft confusion. If the bank column's payments exceed its receipts, the closing balance is a credit balance (an overdraft) — write "By Balance c/d" on the debit side instead, and open the next period with "To Balance b/d" on the credit side.
• A cheque received but not yet banked. If a cheque is received but deposited on a later date, some syllabi treat "received" and "deposited" as two separate events (through a Cheques-in-Hand column); check which convention your textbook uses before assuming they're the same day.

In TatvaBooks, this happens automatically

Writing up a cash book by hand teaches you exactly how cash and bank move together — and every accountant should be able to do it. But in a real business, every invoice, receipt and payment needs to land in the right column instantly, with the cash and bank balance always correct to the rupee. In TatvaBooks, every cash sale, bank receipt, expense payment or bank transfer is recorded once, and the system keeps your running Cash and Bank balances live — a bank deposit or a cash withdrawal from the bank is automatically treated as a contra, with nothing left to post separately.

It's built by Chartered Accountants for Indian businesses, and it's free to start on the Solo plan. See how books stay balanced for you on our cloud accounting software and features pages.

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