The Ledger Classification of Accounts, Cash Book: Meaning and Types, Single Column Cash Book

Lesson Plan: The Ledger and Cash Book

Subject: Financial Accounting
Class: SS1
Term: 1
Week: 9
Age: 15-16 years
Topic: The Ledger
Sub-topic: Classification of Accounts, Cash Book (Meaning, Types, Single Column Cash Book)
Duration: 1 hour
Behavioral Objectives:
By the end of the lesson, students should be able to:

1. Use correct mapping to classify ledgers into personal, impersonal, and private accounts.
2. Define the cash book and explain its purpose.
3. Identify and describe the types of cash book.
4. Explain the use of each column in a cash book.
5. Prepare a single column cash book.

Keywords

• Ledger: A book used to record all accounts of a business, where transactions are classified and summarized.
• Personal Accounts: Accounts that represent individuals or organizations (e.g., creditors, debtors).
• Impersonal Accounts: Accounts that do not represent specific individuals but represent categories like assets, liabilities, or income.
• Private Accounts: Accounts used for transactions that are non-business related (e.g., owner’s personal account).
• Cash Book: A journal used to record all cash receipts and payments, including bank transactions.
• Single Column Cash Book: A type of cash book with one column used to record cash transactions.

Set Induction (5 mins)

The teacher will start by asking students about their experiences with keeping track of money—whether they have ever written down income or expenses. This question will segue into the introduction of the ledger and cash book as tools for recording financial transactions.

Entry Behavior

Students should have a basic understanding of journal entries and accounting principles from previous lessons, including debit and credit.

Learning Resources and Materials:

• Chalkboard/Whiteboard
• Sample Ledger accounts
• Blank cash book template
• Projector (if available)

Building Background/Connection to Prior Knowledge:

Students will recall their earlier lessons on subsidiary books (like sales and purchase journals) and how these journals are used for recording transactions before they are posted to the ledger.

Embedded Core Skills:

• Numeracy Skills: Classifying accounts and preparing cash books.
• Critical Thinking: Understanding the role of each column in a cash book.
• Problem Solving: Correctly preparing and classifying accounts in the ledger and cash book.

Learning Materials:

• Personal Accounts
• Impersonal Accounts
• Private Accounts
• Single Column Cash Book Template

Instructional Materials:

• Whiteboard markers
• Sample transactions for the cash book
• Ledgers for practical exercises

Reference

• Lagos State Scheme of Work for Financial Accounting.
• “Principles of Financial Accounting” by Jerry J. Weygandt.

Content:

1. The Ledger:
   • Definition: The ledger is the principal book of accounts, where transactions are posted after being recorded in journals.
   • Classification of Accounts:
     • Personal Accounts: Accounts related to individuals or organizations, such as customers, suppliers, or banks. Example: Accounts Receivable.
     • Impersonal Accounts: Accounts related to items, expenses, or revenue, like assets, liabilities, or income. Example: Sales, Rent Expense.
     • Private Accounts: Accounts that deal with specific private matters, such as the capital account or drawings in a partnership. Example: Owner’s Equity.
2. Cash Book:
   • Definition: The cash book is a financial journal that records all cash receipts and payments, including bank transactions.
   • Types of Cash Book:
     • Single Column Cash Book: Records only cash transactions.
     • Double Column Cash Book: Records cash and bank transactions together.
     • Triple Column Cash Book: Records cash, bank, and discount transactions.
3. Single Column Cash Book:
   • This type of cash book has one column for cash receipts and one for cash payments. It is used by small businesses to track their cash inflows and outflows.
   • Columns in a Single Column Cash Book:
     • Date Column: For entering the date of each transaction.
     • Details Column: For the description of the transaction.
     • Voucher Column: For voucher numbers.
     • Amount Column: For the cash receipt or payment amount.
     • Balance Column: To calculate the running balance after each transaction.

Presentation Steps:

Step 1: Revision of Previous Topic (5 mins)
The teacher will review the journal entries and subsidiary books covered in previous lessons, particularly focusing on the difference between journals and ledgers. Students will be asked questions about what they remember from earlier lessons.

Step 2: Introduction of New Topic (15 mins)
The teacher will explain the ledger and its role in accounting. Students will be guided through classifying accounts into personal, impersonal, and private accounts using sample transactions. The teacher will then introduce the cash book and its types, focusing on the single column cash book and its columns.

Step 3: Student Contributions and Corrections (15 mins)
Students will work on classifying accounts into personal, impersonal, and private categories using examples. They will also practice preparing a single column cash book from sample transactions provided by the teacher. The teacher will guide the students, providing corrections as necessary.

Teacher’s Activities:

• Introduce the lesson by reviewing journal entries.
• Define the ledger and explain how accounts are classified.
• Demonstrate how to prepare a single column cash book.
• Provide exercises for students to practice classifying accounts and preparing cash books.
• Monitor and correct students as they work.

1. Classification of Accounts

In accounting, accounts are classified into three main categories:

• Personal Accounts: These accounts represent individuals, firms, or organizations with which the business has a financial relationship.
  • Example: Debtors, Creditors.
• Impersonal Accounts: These accounts represent non-human entities and business-related financial categories such as assets, liabilities, and income.
  • Example: Cash Account, Sales Account, Purchases Account.
• Private Accounts: These accounts are used for personal transactions not related to the business’s operations.
  • Example: Owner’s Drawings, Private Expenses.

2. Definition and Importance of Cash Book

The cash book is a financial journal used to record all cash transactions, including receipts and payments. It is essential because it helps businesses track cash flow and ensures proper reconciliation between bank balances and cash balances.

• Types of Cash Books:
  • Single Column Cash Book: A simple cash book where only cash receipts and payments are recorded.
  • Double Column Cash Book: Records both cash and bank transactions.
  • Triple Column Cash Book: Records cash, bank, and discounts.

3. Single Column Cash Book

A single-column cash book has one column for cash receipts and one for cash payments. All cash-related transactions are entered in this book, including receipts from customers, payments to suppliers, and any cash-related expenses.

Example of a Single Column Cash Book:

Learner’s Activities:

• Participate in discussions about account classifications.
• Practice identifying types of accounts and classifying them.
• Prepare a single column cash book from given examples.
• Ask questions when they need clarification.

Class Activity Discussion (FAQs):

Frequently Asked Questions (FAQs):

1. What is the difference between the ledger and the journal?
   Answer: The journal records transactions in chronological order, while the ledger organizes these transactions by accounts. The ledger is used for preparing financial statements.
2. What is the purpose of classifying accounts into personal, impersonal, and private accounts?
   Answer: This classification helps organize financial information by type, making it easier to analyze and prepare accurate financial statements.
3. What is a cash book, and why is it important?
   Answer: A cash book is a record of all cash transactions, both receipts and payments. It helps businesses track their cash flow.
4. How many types of cash books are there, and what are they?
   Answer: There are three types: Single Column Cash Book, Double Column Cash Book, and Triple Column Cash Book. The single column cash book records cash transactions, the double column records cash and bank transactions, and the triple column records cash, bank, and discount transactions.
5. What is recorded in the ‘Amount’ column of a single column cash book?
   Answer: The ‘Amount’ column records the cash receipt or payment amount for each transaction.
6. Can we use a single column cash book for recording bank transactions?
   Answer: No, the single column cash book is only for cash transactions. Bank transactions are recorded in a double column cash book.
7. What is the difference between personal and impersonal accounts?
   Answer: Personal accounts relate to individuals, organizations, or groups, while impersonal accounts relate to assets, liabilities, incomes, and expenses.
8. Why is it important to balance a cash book?
   Answer: Balancing the cash book helps track the current cash position of a business and ensures accurate financial records.
9. What do you record in the ‘Details’ column of a cash book?
   Answer: The ‘Details’ column includes a brief description of each transaction, such as the name of the customer or supplier.
10. What happens if you don’t classify accounts correctly in the ledger?
    Answer: Incorrect classification can lead to errors in financial reporting, affecting the accuracy of financial statements.

Objective Questions (15 Fill-in-the-Blank Questions with Options a, b, c, or d):

1. The ledger is the book used for __________.
   a) Recording transactions
   b) Preparing financial statements
   c) Organizing accounts
   d) Collecting cash
2. __________ accounts relate to individuals or organizations.
   a) Impersonal
   b) Personal
   c) Private
   d) Real
3. In the cash book, the __________ column is used to record cash receipts.
   a) Date
   b) Amount
   c) Balance
   d) Details
4. A __________ is used to record all cash transactions.
   a) Cash Book
   b) Ledger
   c) Journal
   d) Trial Balance
5. The __________ column of a cash book helps track the running balance of cash.
   a) Amount
   b) Voucher
   c) Date
   d) Balance
6. __________ accounts are related to assets and liabilities.
   a) Personal
   b) Impersonal
   c) Private
   d) Capital
7. A __________ cash book records both cash and bank transactions.
   a) Single Column
   b) Double Column
   c) Triple Column
   d) Four Column
8. The __________ column in a single column cash book records the description of the transaction.
   a) Amount
   b) Date
   c) Details
   d) Balance
9. A single column cash book records only __________ transactions.
   a) Cash
   b) Bank
   c) Cash and Bank
   d) Discount
10. The __________ account shows the financial position of the owner of the business.
    a) Personal
    b) Private
    c) Impersonal
    d) Capital
11. The ledger helps organize __________.
    a) Transactions by date
    b) Accounts by type
    c) Assets
    d) Revenue
12. In a double column cash book, the second column is used for __________.
    a) Bank Transactions
    b) Cash Transactions
    c) Discount
    d) Voucher Numbers
13. A ledger is classified into __________ accounts.
    a) Two
    b) Three
    c) Four
    d) Five
14. The __________ column in a cash book keeps a running tally of the business’s available cash.
    a) Amount
    b) Balance
    c) Date
    d) Voucher
15. __________ accounts are related to income and expenses.
    a) Private
    b) Impersonal
    c) Personal
    d) Real

Evaluation Questions (10 Questions):

1. What is the role of the ledger in financial accounting?
2. Differentiate between personal, impersonal, and private accounts.
3. What information do you record in the ‘Amount’ column of a cash book?
4. How do you classify accounts in the ledger?
5. What is the difference between a single column cash book and a double column cash book?
6. Why is it important to maintain a ledger in accounting?
7. How does the classification of accounts in the ledger affect financial statements?
8. What types of transactions are recorded in a single column cash book?
9. Explain the purpose of the balance column in a cash book.
10. How do you prepare a cash book from a set of business transactions?

Conclusion (5 mins):

The teacher will summarize the classification of accounts and the use of cash books in accounting. The lesson will conclude with a review of the importance of maintaining accurate records in the ledger and cash book for effective financial management. Students will be encouraged to practice preparing both ledgers and cash books for real-world scenarios.