Two-Column Cash Book as a Book of Prime Entry

Steps:

• Recall that a cash book records cash and bank transactions in a business.
• Note the two-column version has separate columns for cash and bank to track both.
• Identify its role: it serves as both a journal for initial entries and a ledger for these accounts.
• Confirm it qualifies as a book of prime entry, where transactions are first recorded before posting to the ledger.

Why C is correct:

• A two-column cash book is a book of prime entry, as defined in accounting, because it initially records all cash and bank transactions before they are posted to the general ledger.

Why the others are wrong:

• A: It records both cash and bank transactions, not bank only.
• B: It records both cash and bank transactions, not cash only.
• D: It records cash and bank transactions, not cash discounts, which are handled in journals or allowance accounts.

Final answer: C