Exam layout
Three-column cash book format
A three-column cash book adds discount columns to the cash and bank columns. These are memorandum totals, posted separately to the discount accounts in the nominal ledger.
The standard format
- Discount, cash and bank columns on each side
- Debit side: receipts and discounts allowed
- Credit side: payments and discounts received
- Discount columns totalled, not balanced
- Cash and bank columns balanced as usual
Filled example
| Discount allowed (memo total) | |
| Cash received | RM 800 |
| Bank received | RM 950 |
| Total received | RM 1,750 |
Notes
- The discount columns are memoranda; their totals are posted to discount allowed and discount received.
- Only the cash and bank columns are part of the double entry within the book.
- Discount allowed is an expense; discount received is income.
Building and reading this format
A three-column cash book adds a discount column to the cash and bank columns on each side, in the order discount, cash, bank. When a business settles a debt early, it often gives or gets a cash discount.
Recording the discount beside the payment keeps everything about the settlement in one place. The three columns do not all work the same way.
The cash and bank columns work as in the two-column book. On the debit side, enter the opening balances, then each receipt with its date, narrative and amount in the cash or bank column.
On the credit side, enter payments in the column showing how they left the business. These two columns are part of the double entry. Balance them separately at the end of the period to find cash in hand and the bank balance. The bank balance is a credit balance if the account is overdrawn.
The discount columns are memorandum columns. They are not part of the double entry inside the cash book. The debit-side column collects discount allowed to customers who pay promptly.
The credit-side column collects discount received from suppliers the business pays promptly. For example, a customer clearing a RM1,000 debt pays RM960 into the bank and is allowed RM40 discount. RM960 goes in the bank column and RM40 in the discount column, both on the debit side.
Discount columns are totalled, not balanced. They have no opening or closing balance. At the period end, the discount allowed total is posted to the debit of the discount allowed account.
The discount received total is posted to the credit of the discount received account. The individual entries have already been posted to the customer and supplier accounts, so only the total is transferred. This saves many separate postings.
A large discount allowed total shows the business is giving up income to encourage quick payment. A healthy discount received total shows it pays suppliers early enough to save money. Contra entries affect only the cash and bank columns, never the discount columns.
Marks are mostly lost on the discount columns. Balancing them instead of totalling them is the most damaging mistake. Putting discount allowed on the credit side, or discount received on the debit side, is also common.
Discount allowed goes with receipts on the debit side, and discount received goes with payments on the credit side. Also avoid putting a cheque in the cash column, leaving out one half of a contra entry, or failing to balance cash and bank separately.
If you keep mixing up which discount goes where, we can help. One of our teachers can set out a few cash books with you and show you a quick way to check each side. Book a trial class
Related how-to
These formats are standard accounting practice with our own figures. Check your board's exact requirements on the exam boards page.
Practise the three-column cash book
Share your own attempt in the trial class and the teacher will mark the layout line by line. One-to-one and online, from RM75/hr.
One-hour paid trial · Same-day reply