In the simplest kind of cash book, there are two money columns on each page, the left-hand column for individual amounts, and the right-hand column for periodic totals. Forms of simple cash book pages are shown on page 86.
11. Cash debits.—As before intimated, every entry in the cash book (cash journal) must express a debit and a credit. At first inspection, it may appear that but one phase of this relation is expressed in the forms illustrated. It should be remembered, however, that this book records no transactions that do not increase or decrease the supply of cash. Thus, the first entry (after the balance has been brought forward) records the fact that the business received $100 cash from John Brown to apply on his account. According to the rule for assigning debits and credits, the cash account must be charged with $100 because cash comes into the business, and John Brown's account must be cred ited with $100 because a right to collect $100 from him ceases or "goes out." Both sides of this transaction have been recorded by entering the name, John Brown, with an explanation and the amount of his payment on the left-hand page of the cash book. The amount, $100, written in the left-hand money column may be considered as prima rily a debit to cash, since it is written on the cash-debit page. Secondarily, it is to be interpreted as a credit to John Brown, since his name is written in the "ac count-credited" column; the entering of his name there indicates the complementary credit that off-sets the charge of $100 to the cash account. Similar observa tions apply to the other three accounts named in the cash-debit column.
The total of the four cash-debit items for the day is $1,600; this total is written in the right-hand, or total money column. It is evident that in posting to the debit side of the cash account it is possible to post this $1,600 instead of four separate items composing it. This method substitutes, in the present instance, one posting to cash instead of four. In actual practice, one total may sometimes be substituted for fifty or sixty individual amounts, or, when no posting to the cash account is made until the end of the month, one total may be posted to the debit of the cash instead of the many individual amounts received during the month. It is only necessary to carry the cash-book
page totals forward from day to day until the end of the month is reached.
While it is thus possible to avoid posting these in dividual amounts to the debit of cash, it is not possible to avoid posting the individual credits, if this form of book is used. The journal process of designating these transactions is completed when the cash account has been charged with the total cash received, and the individual accounts with the things or persons that produced the values making up this total, have been credited. We would have to credit John Brown's ac count, and the notes-receivable and notes-payable ac counts with the cash received from them. The credit to the cash-sales account need not be considered at this time; it will be explained later. The pages of each account in the ledger are designated in the cash-book column headed "L. F.," which means ledger folio.
12. Cash credits.—Just as the left-hand page _ records cash receipts, the right-hand page shows cash payments. We have, then, a duplicate of our ledger account in our cash book. Some business houses omit the cash account entirely from their ledger because they have in their cash book the same information that it gives. This practice, however, is not to be com mended. The ledger should contain a complete sum marized record of the condition and the operation of the business. The first item on the cash-credit page, in the illustration given, records the fact that a check was sent to Hiram Smith for the amount of $500 to be applied to the debt that the business had incurred. According to the rule for journalizing, we see that the account with Hiram Smith is to be debited because a right held by him against the business has ceased or "come in," while the cash account must be credited be cause cash goes out. The fact that this payment was made by check does not, of course, alter the rule, since "cash" includes not only cash on hand but cash in bank. Therefore, the $500 written in the left-hand money column of the credit page of the cash book is primarily a credit to cash. Secondarily, it is a debit to the account with Hiram Smith, and this fact is in dicated by writing his name in the account-debited column.