The correct answer is: C. Three column cash book
A contra entry is an entry made on the opposite side of a ledger account to balance the account. Contra entries are often used in cash books to record transactions that affect both income and expenses.
A simple cash book is a basic accounting record that tracks cash receipts and payments. It does not have columns for contra entries, so it cannot be used to record transactions that affect both income and expenses.
A petty cash book is a small cash book that is used to track small cash transactions. It does not have columns for contra entries, so it cannot be used to record transactions that affect both income and expenses.
A three column cash book is a more detailed cash book that has columns for income, expenses, and contra entries. This allows it to be used to record transactions that affect both income and expenses.
Therefore, the correct answer is C. Three column cash book.