A cash book with cash and bank columns serves which two accounting functions?
Correct answer: C. Both a book of prime entry and a ledger
- A. Only a journal function
- B. Only a ledger function
- C. Both a book of prime entry and a ledger
- D. Both a trial balance and a balance sheet
Explanation
The cash book is a book of prime entry because cash and bank transactions are first recorded in it. It also acts as the ledger for the cash and bank accounts, so separate accounts for them are generally unnecessary.
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About Double Entry and Books of Prime Entry
Double entry records every transaction with equal debit and credit entries, based on the accounting equation and the classification of assets, liabilities, capital, income and expenses. Books of prime entry include the sales, purchases, returns and cash books, journal, and source documents used before transactions are posted to ledger accounts.
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