Three Column Cash Book – SS1 Financial Accounting Lesson Note (Second Term)

This type of Cash Book combines a discount column on both sides to the cash and bank column. The discounts allowed column is on the debit side, while the discounts received column is on the credit side. The principle of double entry is also applicable in the three-column Cash Book. It must be noted however that the discount allowed and the discount received columns though they have the appearance of account columns, are merely memoranda, from them, we can obtain periodic totals that will be entered into the discount accounts.

NOTE: The discount columns in the Cash Book are totaled and not balanced. They are to be added weekly or monthly at the time the cash and bank columns are balanced and ruled off. the totals of the discount columns are taken to the discount accounts in the ledger and are entered on the same sides of these accounts as they are found in the Cash Book