Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →
New accountants confuse the day book, cash book and ledger and do not know which report to use for which check.
The day book lists every transaction by date; the cash book lists only cash and bank movements; the ledger regroups the same entries account by account.
Tally and Zoho Books produce all three as reports from the same vouchers; nothing is entered twice.
One transaction traced through all three books, and the bank column of the cash book ready to compare with the bank statement.
The day book lists every transaction of the business in date order. The cash book records only cash and bank receipts and payments. The ledger takes the same entries and regroups them account by account. The day book and cash book are books of original entry, where a transaction is first written; the ledger is the book of final entry, where balances are built.
Day book vs cash book vs ledger at a glance
| Book | What goes in | Who uses it | One sample line | Report in Tally / Zoho Books |
|---|---|---|---|---|
| Day book | Every transaction: sales, purchases, receipts, payments, journals | Accountant reviewing the day’s work | 3 Sep: Sales to Mehta Traders ₹29,500 | Day Book / Journal report |
| Cash book | Only cash and bank receipts and payments | Cashier, accountant, auditor | 15 Sep: Received from Mehta Traders by NEFT ₹29,500 | Cash/Bank Books / Bank account transactions |
| Ledger | All entries regrouped by account, with a running balance | Accountant, manager, auditor | Mehta Traders: Dr ₹29,500, Cr ₹29,500, balance nil | Ledger / Account transactions |
In modern software you do not write three books. You enter one voucher, and the software shows it in all three reports. The concepts still matter because each report answers a different question: what happened today, how much money moved, and what each account now stands at.
What is a three-column cash book, and where does the bank column come from?
A simple cash book has one amount column on each side: receipts on the left (debit) and payments on the right (credit). A three-column cash book adds two more columns on each side: discount and bank.
- Discount column – cash discount allowed to customers (receipts side) or received from suppliers (payments side). It is a memo column; its total is posted to the discount account.
- Cash column – physical cash received or paid.
- Bank column – money moving through the bank: cheques deposited and issued, NEFT, RTGS, IMPS and UPI credits and debits.
The bank column is the business’s own copy of the bank account. When cash is deposited into the bank, it appears in both columns: as a payment in the cash column and a receipt in the bank column. This is a contra entry, marked “C” in a manual book.
Worked example: one ₹29,500 receipt in three books
Mehta Traders bought goods worth ₹25,000 plus 18% GST of ₹4,500 on 3 September, and paid the full ₹29,500 by NEFT on 15 September.
- Day book: two lines. On 3 September, a sales voucher of ₹29,500. On 15 September, a receipt voucher of ₹29,500.
- Cash book: one line only, on 15 September, in the bank column of the receipts side: ₹29,500 from Mehta Traders. The 3 September sale is not here, because no money moved.
- Ledger: in the Mehta Traders account, a debit of ₹29,500 on 3 September and a credit of ₹29,500 on 15 September, leaving a nil balance. The same entries also reach the Sales (₹25,000), Output GST (₹4,500) and Bank (₹29,500) ledgers.
So the day book shows two events, the cash book one, and the customer’s ledger both, netted to zero.
Why do auditors ask for the cash book and the bank statement together?
The bank column of the cash book is your record of the bank account. The bank statement is the bank’s record of the same account. They should tell the same story, but they rarely agree on any given day because of timing. A cheque you issued on 30 September may be presented on 3 October. A bank charge debited on 30 September may not be in your books yet.
Auditors therefore ask for both, plus the bank reconciliation statement (BRS) that explains every difference. If the cash book balance, adjusted for the listed items, does not reach the statement balance, there is an error or an unrecorded transaction. A cash book is not the same as a passbook, which is the bank’s version, and the two are mirror images in debit and credit.
What to read next
- Next in this series: Receipt, payment, contra and journal vouchers explained
- What is bank reconciliation?
- Bank reconciliation statement (BRS) format in India
- Cash book vs passbook
- Account reconciliation software in India
When the bank column grows to hundreds of lines a month, TransactIG matches bank statement lines to the entries in your books, puts the unmatched ones in an exception queue and produces audit-ready exports.