Cash Book – Every business activity ultimately result in cash, therefore, recording of transaction involving cash must be recorded in a separate journal. This journal is called cash book. It may be defined as the record of transaction relating to receipt of and payment in cash.
Therefore, all cash transaction began to be recorded separately in a book called the cash-book, which later began to be used to record bank book and discount transaction as well besides cash transaction by doing so daily checking of cash in hand and periodical checking of cash in hand and periodical checking of bank balance was rendered quick and easy. Although cash-book is a book of original entry, the use of cash-book as a subsidiary book is often dispensed with. It is an integral part of ledger. But nonetheless, it serves the dual purpose of journal as well as ledger.
In Simple Words – Cash transactions are straightaway recorded in the Cash Book and on the basis of such a record, ledger accounts are prepared. Therefore, the Cash-Book is a subsidiary book. But the Cash Book itself serves as the cash account and the bank account; the balances are entered in the trial balance directly. The Cash-Book, therefore, is part of the ledger also. Hence, it has also to be treated as the principal book. The Cash-Book is thus both a subsidiary book and a principal book.