All 26 Cash Book & Petty Cash questions
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How do you balance the cash book? What is the difference between the cash book and the bank statement? What does a debit balance and a credit balance mean in the cash book? What is the difference between cash and bank in bookkeeping? Why must cash receipts be banked promptly? What is the imprest system for petty cash? How is the petty cash book reimbursed and posted? What is a contra entry in the cash book? How do discounts allowed and received appear in the three-column cash book? What internal controls apply to cash and petty cash handling?
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What is a two-column versus three-column difference in one line?

Beginner

Answer

A two-column cash book has cash and bank money columns only; a three-column cash book adds a discount memorandum column on each side for discounts allowed (receipts side) and discounts received (payments side). The extra columns speed the recording and posting of settlement discounts.
Real-world example A business offering prompt-payment discounts adds discount columns, making its cash book three-column.

Common follow-ups: What does the third column add? | Which discounts go on the receipts side?

Books of Prime Entry Sales & Purchase Ledgers Cash Book & Petty Cash
All 26 Cash Book & Petty Cash questions