The correct answer is C. Three columns cash book.
A cash book is a book of original entry used to record all cash receipts and payments. It is a two-sided book, with one side for cash receipts and the other side for cash payments. The cash book can be either a single-column cash book or a three-column cash book.
A single-column cash book has only one column for each side of the transaction, i.e., cash receipts and cash payments. A three-column cash book has three columns for each side of the transaction, i.e., cash, bank, and discount.
The discount column is used to record any discounts received or allowed. Discounts are reductions in the amount of money owed to a supplier or customer. They can be taken for prompt payment or for volume purchases.
The three-column cash book is more detailed than the single-column cash book, as it provides more information about each transaction. This information can be useful for tracking cash flow and for preparing financial statements.
The other options are incorrect because:
- A cash book is a book of original entry, while a two columns cash book is a type of cash book.
- A petty cash book is a small cash book used to record petty cash transactions.
- A three columns cash book is a type of cash book that has three columns for each side of the transaction, i.e., cash, bank, and discount.