Transaction Analysis June 2020

A three-column cash book is a financial accounting tool used to record transactions, categorize them into cash, bank, and discount columns, and maintain a balance of cash and bank accounts. It helps track cash inflows and outflows, analyze transactions, and reconcile bank balances.

The balances brought forward are the opening balances in the cash book. These are the amounts of cash and bank on hand at the beginning of the accounting period.

A discount is a reduction in the amount payable by a customer or supplier. It's often offered for early payment or bulk purchases.

When a customer pays their account balance, it's considered a cash inflow as it increases the business's cash balance. Similarly, when a supplier receives payment, it's a cash outflow as it reduces their cash balance.

Cash sales paid directly into the bank increase the bank balance, while cash sales increase the cash balance.

The Balance Brought Forward (B/F) represents the opening balances of cash and bank at the beginning of the period.

The Balance Carried Down (Bal. c/d) represents the closing balances of cash and bank at the end of the period.

The 'D' in the 'Dĺsct' column denotes 'Discount'. Discounts are given or received on payments, usually for early or bulk purchases.

Entries on the debit side (D) of the cash book represent money coming into the business, while entries on the credit side (C) represent money going out of the business.