It is safe and convenient to carry on the business transactions only in cash but the sales promotion will affect

If all these small payments are recorded in the main cash book, it will be loaded with lot of entries. Hence, all petty payments of the business may be recorded in a separate book, which is called as "Petty Cash book"

(i) Trade discount is a deduction given by the supplier to the buyer on the list price or catalogue price of the goods
(ii) It is given as a trade practice or when goods are purchased in large quantities. It is shown as a deduction in the invoice.
(iii) Trade discount is not recorded in the books of accounts. Only the net amount is recorded.

(i) Cash discount is allowed to the parties making prompt or immediate payment. It is discount allowed (loss) for the creditor and discount received (gain) for the debtor who makes payment
(ii) The discount is allowed when payment is received or made and hence the entry for discount is also passed with the entry of payment.

(i) A three column cash book includes three amount columns on both sides, i.e., cash, discount and bank, This cash book is prepared in the same way as simple and double column cash books are prepared.
(ii) Opening balance, cash deposited into bank, cheque deposited in the bank appear in the bank column on the debit side of the three column cash book.
(iii) All the transactions which decrease bank balance are recorded in the bank column on the credit side

He will be maintaining the following other books to be maintained:
1. Triple column each book.
2. Petty cash book (Analytical).
3. Purchase book for credit purchase
4. Sales book for credit sales.
5. Purchase returns book.
6. Sales returns book.
7. Business book account (i.e. current account to the maintained).
8. Proper journal for other assets maintaining:
(i) All cash transactions book recorded is cash book.
(ii) All petty expenses are to the recorded is analytical petty cash book.
(iii) All credit transactions to the recorded is special purpose books (i.e. purchase book, sales book, purchase return book and sales return book and proper journal.

(i) Simple petty cash book:
(a) A simple petty cash book resembles the single column cash book. But the ruling is different.
(b) On the debit side, only one amount will be recorded which is the advance received from the head cashier.
(c) On the credit side, all payments are recorded in only one column. This is known as simple petty cash book.
(ii) Analytical petty cash book:
(a) In analytical petty cash book, a separate column is provided for different heads of payments and one column for total payments.
(b) When the petty expenses are recorded in the total payment column, the same amount is also recorded in the appropriate expense column. This is known as Analytical petty cash book.

Importance of cash book is discussed below:
(i) Serves as both journal and ledger: When cash book is maintained; it is not necessary to open a separate cash account in the ledger. Thus, cash book serves the purpose of a journal and a ledger.
(ii) Saves time and labour: When cash transactions are recorded through journal entries, a lot of time and labour will be involved. To avoid this, all cash transactions are straightaway recorded in the cash book, which saves time and labour.
(iii) Shows the cash and bank balance: It helps to know the cash and bank balance at any point of time by comparing the total cash receipts and cash payments.
(iv) Benefit of division of labour: As cash book is a separate subsidiary book, an independent person can maintain it. Hence, the business can get the benefit of division of labour.

When the two accounts involved in a transaction are cash account and bank account, then both the aspects are entered in cash book itself. As both the debit and credit aspects of a transaction are recorded in the cash book, such entries are called contra entries.
Example:
(i) When cash is paid into bank, it is recorded in the bank column on the debit side and in the cash column on the credit side of the cash book.
(ii) When cash is drawn from bank for office use, it is entered in cash column on the debit side and in the bank column on the credit side of the cash book.

(i) The amount given to the petty cashier in advance is known as "Imprest Money". The word imprest means payment in advance.
(ii) The word imprest means payment in advance.
(iii) The petty cashier makes payments from this amount and records them in petty cash book. At the end of a particular period the petty cashier submits the petty cash book to the head cashier.
(iv) The head cashier scrutinises the petty payments and issues a fresh cheque equal to the amount spent by petty cashier so that the total amount with the petty cashier is how equal to the amount he had received in the beginning as advance.
(v) Under the system the total cash with the petty cashier never exceeds the imprest and at any time during the period. This method thus provides an effective control over petty payments.