Asked Nov 23, 2019

State the reasons of the following statement: 

  • The balance in the cash column of the cash book is always a debit balance where as that in the bank column is sometimes credit also.
  • Contra entries in the cash book are not posted into the ledger.
  • The cash account and the bank account are not posted in the ledger.

Expert Answer

Step 1

a.   Cash column of cash book will always show debit balance because cash payment can never exceed the cash in hand.

When debit balance is more than the credit balance, it is a debit balance/overdraft as per  pass book. When the customer deposits any amount into the bank, his bank balance increase, i.e., cash book (bank column) shows a debit balance.

Step 2

b.   In the ledger folio column contra entries are marked with letter “C”. These are not poste...

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