Active learning ideas
The Cash Book is a unique book of original entry because it also serves as a ledger account. Students learn to record all cash and bank transactions, including the complexities of cash discounts and contra entries. This topic also introduces the Petty Cash Book and the imprest system, which is a practical method for managing small, everyday business expenses like office snacks or local transport.
Activity 01
Groups are given a set amount of 'petty cash' and a list of small expenses. They must record these and calculate the 'reimbursement' needed to restore the float under the imprest system.
How do we record cash discounts in the cash book?
Activity 02
Students are given a scenario where cash is deposited into the bank. They think about how it affects both the cash and bank columns, then pair up to draw the entry.
What is a contra entry?
Activity 03
Set up stations with different payment scenarios involving 'Cash Discount Allowed' and 'Cash Discount Received'. Students calculate the final amount paid and record it in the three-column cash book.
How does the imprest system control petty cash expenditure?
A few notes on teaching this unit
Watch Out for These Misconceptions
Trade discounts are recorded in the Cash Book.
Explain that only cash discounts (for prompt payment) are recorded in the Cash Book; trade discounts are deducted before the invoice price. A comparative calculation exercise helps students see that trade discounts never enter the ledger.
A contra entry involves an external party.
Clarify that a contra entry is an internal transfer between the cash box and the bank account. Using a visual 'money transfer' diagram during peer discussion helps students visualize that no money is leaving the business.
Methods used in this brief
Source Documents and Books of Original Entry
Students examine various source documents and their role in the accounting cycle. They will learn to record transactions in special journals such as the Sales and Purchases Journals.
8 methodologies
The General Ledger and Trial Balance
This topic covers the posting of journal entries to the general ledger and the balancing of accounts. Students will extract a trial balance to check the arithmetical accuracy of the ledgers.
8 methodologies