Vetri is a sole trader selling food products. He maintains a simple cash book. He sells and purchases goods both on cash and credit. He maintains the cash book by himself. He allows discount and receives discount. He has his personal bank account. He also has so many petty expenses. Now, he wants to establish his business. But he wants to maintain the cash book all by himself.
Now, discuss on the following points:
(i) Suggest him some better ways of maintaining the cash transactions
(ii) When his business becomes large, what other books will he be maintaining?
(i) Suggestions:
He may maintain triple column cash book, because he can know all cash transactions is a same account.
Instead of personal bank account he can open business bank account (i.e.) current account.
(ii) He will be maintaining the following other books:
1. Triple column cash book.
2. Petty cash book (Analytical).
3. Purchases book for credit purchases
4. Sales book for credit sales.
5. Purchases returns book.
6. Sales returns book.
7. Business book account (i.e. current account to be maintained).
8. Proper journal for other assets maintaining:
\(\bullet\) All cash transactions recorded in cash book.
\(\bullet\) All petty expenses are to recorded in analytical petty cash book.
\(\bullet\) All credit transactions to recorded in special purpose books (i.e. purchases book, sales book, purchases return book and sales returns book and proper journal.