The Three-Column Cash Book With Discounts Well Explained - SS1 Accounting Past Questions and Answers - page 1
What are the columns in a three-column cash book?
Cash received, cash payments, and inventory
Cash received, cash payments, and discount
Accounts receivable, accounts payable, and cash in hand
Sales, purchases, and wages
How are discounts recorded in a three-column cash book?
In the cash received column
In the cash payments column
In the discount column
In the inventory column
What is the purpose of balancing a cash book?
To ensure that the total of the cash received column equals the total of the cash payments column
To determine the net balance of cash in hand or bank balance
To verify the accuracy of the entries
All of the above
Which of the following is an example of a source document?
Cash book
Balance sheet
Receipt
Income statement
What type of entry is made in a cash book when a customer receives a discount for early payment?
Credit to the cash received column
Debit to the discount column
Credit to the discount column
Debit to the cash payments column
What type of transaction is recorded in the discount column of a cash book?
Cash received
Cash payments
Discounts given
All of the above
What are the four rules that guide the entry of transactions in a three-column cash book?
The four rules are:
1) all cash received is entered in the cash received column, and all cash payments are entered in the cash payments column,
2) entries should be dated and have a brief description of the transaction,
3) all transactions must be entered in the correct columns and with the correct amounts, and
4) the cash book must be balanced regularly to ensure that the total of the cash received column equals the total of the cash payments column, and the net balance is the cash in hand or the bank balance.
What is the purpose of recording discounts in a cash book?
The purpose of recording discounts in a cash book is to keep track of discounts given or received and maintain accurate records of cash transactions. This helps businesses to monitor their cash flows and make informed decisions about managing their finances.