What is Bank cash book? Importance of bank cash book

Bank cash book

What is Bank cash book?

Meaning of bank cash book

Bank cash book was introduced as part of the new accounting systems to minimize the miss appropriation or embezzlement of cash. Such a book is considered as a mechanism to control and safeguard cash of government office.

Bank cash book is also known as general ledger or multicolored cash book of government office. It is one of the main books of account maintained by operating level office of government of Nepal for recording their cash and bank transaction. It records cash receipts and cash payment including budget release. It is also prepared with analytically column for cash account. Bank account, budget expenditure account, advance account and miscellaneous account. It is prepared in a form designed under AFG No. 5, which includes five (5) account and seventeen (17) columns. Each account under this book is divided into two column i.e. debit and credit. It is prepared under the principle of double entry system of book keeping; it is a basis for preparing trial balance to check the arithmetical accuracy of the government office.

Importance of bank cash book

Bank cash book is one of the most importance books of government accounting to be prepared by operating level officer of government of Nepal. It is importance for government office under operating level due ti following points.

• It shows the amount of expenditure, cash balance, bank balance and advance given and cleared at any time after each transaction.

• It is required to prepare trial balance which helps to check the arithmetical accuracy of finance transaction of government of Nepal.

• It helps to check the misuse, misappropriation and embezzlement of cash.

• It is necessary to safeguard and control cash in a proper way.

• It makes possible for cross checking with the balance as shown by the bank statement.

• It reduces the changes of tried and misuse.
Special of bank cash book

Bank cash book is a book of account which is prepared under auditor general form AGF No.5 and it has 17 columns under 5 different accounts. The specimen of bank cash book is as follows:
Column No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
heading

• Date
• Reference No.
• Particulars
• Debit of cash a/c
• Credit of cash a/c
• Debit of bank a/c
• Credit of bank a/c
• Cheque number
• Bank balance
• Budget expenditure head no.
• Budget expenditure
• Advance paid
• Advance cleared
• Miscellaneous a/c  number
• Debit of miscellaneous
• Credit of miscellaneous
• remarks

Explanation

1. The dates of financial transactions are recorded.
2. The code number or journal voucher number is recorded serially.
3. Short description of narration of the transaction is written.
4. It is  used payment and deposits of cash into bank are 
5. All the cash payment and deposits of cash into bank are recorded.
6. All the receipts through bank are recorded.
7. Issue of cheque for the payment of goods or services is recorded.
8. The number of cheque issued for payment.
9. It is used to show the bank balance after receipt and payment of cheque.
10. The budget head or sub head number is mentioned in cash of transactions relation to budget expenditure.
11. The amount of budget expenditure is shown.
12. The amount of advance given to any person or party for budget head is recorded.
13. It is used to record the amount of advance cleared.
14. The numbers of miscellaneous transaction are mentioned if any.
15. It is shown other than cash, bank, budget expenditures and advance. It shows only debit amount of miscellaneous account.
16. The credit of miscellaneous account is shown.
17. It is used to record any other information which is not mentioned in the other column.

Notes to remember, while preparing bank cash book
• Before preparing bank cash book, journal voucher should be prepared. However, it can be prepared without journal voucher too.
• Inter head transaction of budget is not recorded in bank cash book.
• The amount of debit in journal must be posted in the debit column and the amount of credit must be posted in the credit column of the concerned account.
• Any transaction, which is not concerned with cash, bank, budget expenditure and advance accounts, must be recorded in miscellaneous account.
• No revenues are show in the bank cash book except budget release of bank order.
• All the transactions are followed by principle of double entry system of book keeping except advance given or cleared. The same amount should be shown in the three columns.
Preparation of bank cash book
Bank cash book is a general ledger and it is prepared on the basis of journal vouchers. While posting the transaction from journal voucher to bank cash book, the general rules for making debit and credit of the transaction must be followed. The following types of journal voucher should be prepared while preparing bank cash book.
• General journal voucher.
• Journal voucher for advance transactions.
• Miscellaneous journal voucher.
Posting of a general journal voucher
General journal voucher is also called ordinary journal voucher. The journal voucher prepared for recording budget expenditures under different head in government of office is known as general journal voucher. Voucher relating to payment for salary, allowance, TADA, rent, furniture, machinery, office materials et are some examples of general journal voucher.
Posting of advance given transactions
For advance given transaction, the amount is recorded in three column of bank cash book while advance is given for official purpose; the same amount is recorded first on budget expenditure column, second on credit column of bank account and third on given column of advance account.
Posting from miscellaneous transactions
Those transactions which are not related to budget expenditures, advance given and advance clearance are known as miscellaneous transactions. Budget release, revolving fund, petty cash fund and deduction from salary are example of miscellaneous transactions.

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