Triple column cash book is an improvement over the double column cash book. In modern times, it is virtually impossible to imagine any business which does not deal with banks. Most of the transactions relating to receipts and payments of money are made through cheques. So the transaction trough banks are also recorded in the triple column cash book by adding one more column that is bank column on both sides of the cash book. Therefore, there are three columns on both sides of triple column cash books namely, cash, bank, and discount columns. That is why this type of cash book is known as the triple column cash book.
Receipt side (Dr side) of the triple column cash book is used to record all receipts both in cash and by cheque and also to record the discount allowed to our debtors while receiving payments.
Cash receipts are entered in the cash column whereas the amount received by cheque is entered in the bank column and discount allowed in the discount column. Posting from the debit side of cash book is made to the credit side of respective account (in case of personal accounts credit is to be given for cash or cheque received plus discount allowed)
Payment side (Cr side) of the triple column cash book is used to record all payments both in cash and through cash also is used to record the discount received by a business from creditors while making payments to them. Cash payment is recorded in the cash column, payments through cheque are entered in the bank column and discounted received in the discount column. Posting from credit side of the cash book is made on the debit side of respective account (in case of personal accounts debit is to be given for the total of payments made and discount received)
After recording all the relevant transactions in the cash book, all the column of cash book are totaled. The difference in cash column is put on the credit side of the cash book in the column by writing ‘by balance c/d’. The bank balance may have a debit balance or credit balance. If the total of the debit side of the bank column is more than the credit side of the bank column, it has a debit balance and if the total of the credit side is more than the total of the debit side, then it has credit balance (overdraft).
However, the difference is put on the lesser side. There is no need to balance the discount columns. The discount columns of both sides are totaled.
In the triple column cash book, there will be some cross or contra entries, that is the transfer of money from cash to bank (amount deposited) and vice versa (amount withdrawn from bank for office use). In all such cases, both entries occur in the cash book and no ledger entry is required. This is indicated by contra sign (C) in the folio column indicating thereby that the double-entry aspects of this transaction are complete and it requires no posting in the ledger