The three-column cash book is a specialized version of the traditional cash book used in accounting. It contains three separate columns for recording cash transactions: the cash column, the bank column, and the discount column. Each column serves a specific purpose and helps in maintaining an accurate record of cash inflows and outflows.

Here’s a breakdown of the three columns:

1. Cash Column:
– The cash column is used to record all cash transactions, including cash receipts and cash payments.
– Cash receipts such as sales, loans, or any other sources of cash inflow are recorded on the left side (debit) of this column.
– Cash payments, such as expenses, purchases, or withdrawals, are recorded on the right side (credit) of this column.

2. Bank Column:
– The bank column is used to record transactions related to bank accounts, such as deposits or withdrawals made through the bank.
– Bank receipts, such as cash deposits or payments received by check, are recorded on the left side (debit) of this column.
– Bank payments, such as check payments or withdrawals from the bank, are recorded on the right side (credit) of this column.

3. Discount Column:
– The discount column is used to record any cash discounts given or received during transactions.
– Cash discounts are generally provided to customers who make prompt payment or received from suppliers for early settlement of bills.
– The amount of the cash discount is recorded on the same side as the original entry, either in the cash column or the bank column.

The three-column cash book allows for efficient tracking and reconciliation of cash and bank transactions, providing a comprehensive view of an organization’s financial activities. By maintaining separate columns for cash, bank, and discounts, it enables better analysis and management of cash flow, ensuring accurate financial reporting.

This is similar to the two column cash book except that the discount column is added to both the debit side and the credit side. The debit side, it will be recalled, records receipts while the credit side records payments. The purpose of the discount column in the debit side is, therefore, to record discounts which are allowed to customers when the business receives cash from them. Similarly, the discount column on the credit side is for discounts which the business receives from its suppliers when payments are made to them.


The cash book of S. Essien is maintained with cash bank and discount columns. During the month of March, 19×9, the following transactions took place.

March 1. Cash balances in hand N100, and at bank N1,220.

March 2. Paid J. Okonedo by cheque N105 in full settlement of his account for N110.

March 5. Cash purchases N48, and purchases by cheque N850.

March 10. Cash sales N780

March 12. Cash paid into bank N560

March 15. Received cheque from M. Dantata N650 on account.

March 18. Received cheque from j. Robens N65 in full settlement of his account for N68.

March 23. Paid N650 into bank.

March 26. Cash sales N400

March 28. Drew cash from bank for office use N200.

You are required to balance the cash book and bring down the balances of cash in hand and at bank on 31st March, 19×9.

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