Cash Book Serves Dual Role in Accounting

Steps:

• Identify books of prime entry: These record original transactions before posting to ledgers, including cash book, purchases journal, sales journal, and general journal.
• Recall ledger accounts: These maintain running balances for specific accounts like cash.
• Compare functions: Check which book records transactions and also tracks balances like a ledger.
• Select the match: The cash book records cash transactions and maintains a cash balance, acting as both.

Why A is correct:

• By definition, the cash book is a book of prime entry that records cash inflows and outflows while serving as the cash ledger account, directly updating the cash balance.

Why the others are wrong:

• B. Purchases journal only records credit purchases and posts totals to ledger accounts; it is not a ledger itself.
• C. Sales journal only records credit sales and posts totals to ledger accounts; it is not a ledger itself.
• D. Journal records non-routine transactions and posts entries to ledger accounts; it is not a ledger itself.

Final answer: A