Page 256 - Account 10

1. Introduction
New Accounting System has given much emphasis on the banking transactions for
the receipt and payment of cash. No expenditures are made in cash except that for the petty
amount, which are paid from petty cash fund. For the control of cash in the government
office, all the cash receipts are received through the bank, or if received in cash, then
immediately deposited into the bank and all the payments are made through the bank
except that for the petty amount. Almost all the government transactions are performed
on cash basis i.e. through bank dealing. Thus, a book of account, which contains all the
cash payment and receipt through the bank is prepared by each government office, is
known as a bank cash book. In another word, a bank cash book may be defined as the
book of account, maintained by each operating level office as its general ledger to record
the cash receipt and payment through the bank during a certain period on the basis of
their corresponding journal vouchers.
This book was used as ‘Mal Cash Ledger’ in the past in some places, where there were
no banking services. But with the provision of banking facilities in every district, it has
now been used as a bank cash book throughout the country. Since, it contains various
columns, it is also called a multi-column cash book or multi column ledger or general
ledger. Every account is divided into debit and credit columns for recording the debit
or credit headings and, thus, it is based on the principle of double entry system. It has
altogether 17 columns and 5 accounts viz. cash A/c, bank A/c, budget expenditure A/c,
advance expenditure A/c and miscellaneous A/c to record the necessary information.
It is prepared by AFG No. 5. This book is closed at the end of every month to check the
arithmetic accuracy.

Key Point A bank cash book is a general ledger maintained by all the operating level
offices to record cash receipt and payment made through the bank.

2. Importance of Bank Cash Book
A bank cash book is the general ledger of the operating level offices of the Government
of Nepal, which contains all the necessary accounts like cash, bank, expenditures, advance
and miscellaneous at a place. It gives complete information about the transactions. Thus,
it plays a tremendous role to satisfy the objectives of the New Accounting System. The
following points of the bank cash book may further highlight its importance:

i. Helps to Provide Complete Information
In bank cash book, all the transactions are classified into the five accounts which
provide actual and complete financial information. Such as cash A/c provides cash
balance, bank A/c provides bank balance, budget expenditure A/c provides total budget
expenditure and so on. The information plays vital role to take any kinds of decision. It
helps in planning of cash requirement and disbursement.

ii. Helps to Detect and Correct Numerical Errors
Bank cash book is based on the principles of double entry book keeping system. It is
closed at the end of every month by preparing trial balance. Trial balance helps to check
the arithmetical accuracy which helps to detect errors immediately in any transactions.

256 Aakar’s Office Practice and Accountancy - 10 Bank Cash Book 257