What is a three column cash book​

The Cash Book that has three columns for discount received and paid, cash transactions and bank transactions is called Three Column Cash Book.

Explanation

The three column cash book (also known as triple column cash book) has three money columns on both debit and credit side – one on each side for recording discount, cash and bank amounts. If a business keeps a bank account and receipts and payments are frequently made through bank account than it is useful to maintain a three column cash book rather than a single column cash book or a double column cash book.

It is the custom of the business houses that discount is allowed and received for early payments of dues. If cash is paid early, creditors may allow a discount. On the other hand, if debtors pay early, a discount may be allowed to them. It may be noted that cash and discount are related to each other that’s why discount columns are also provided in Cash Book.

Thus in three column cash book, three columns for amount are provided on each side. One column is used to record cash receipts and payments, the second column is provided to record banking transactions and in third column discount received and discount allowed are recorded.

Where, the single and double column cash books are alternatives to a cash account, the three column cash book serves the purpose of cash as well as bank account.

Answer60 minutes;