Importance of a cash book are as follows :
1. It works as a journal and ledger both : By maintaining cash book, it is not necessary to pass the journal entry for the transactions recorded in it. Moreover, it is not necessary to open a separate cash account in the ledger. Thus, cash book works as a ledger and as a journal both.
2. It saves the time and energy (labour) : If in the cash book, the transactions related to bank and discount are entered then cash book works as an account, therefore the time and energy (labour) are saved.
3. Cash and bank balance can be known: Bank balance and cash balance of the business can be known as the transactions of cash and with bank are properly recorded in the cash book.
4. Surplus and deficit in the balance can be known: Balance of cash from cash book is found at the end of the everyday and it can be compared with actual cash of the cash-box. So that difference in the balance can be known.
5. Benefit of division of labour : Cash book is a separate book of the subsidiary books, and an independent person can maintain it so business can get the benefit of division of labour.
6. Control over the errors and frauds is possible: Balance as per cash book and as in cash-box is compared daily, so if any fraud or error is there in entering the incomes and expenses can be known from the deficit or surplus of the balance. Against this types of the errors or frauds action can be taken.
