Difference between cash book and pass book balance

It is common for the book balance to not agree with the balance on the bank. The relationship between the customer and the banker is that of a creditor and a debtor. The points given below are noteworthy, so far as the difference between cash book and cash account is concerned. Cash book deals with cash transactions and pass book deals with bank transaction. Cheques deposited for collection entered on the debit side of the cash book on the date of depositing the cheques into the bank. Cash book in accounting the cash book is a chronological record of the receipts and payments transactions for a business. Jun 29, 2011 bank reconciliation statement is a statement prepared to reconcile the difference between the balances as per the bank column of the cash book and pass book on any given date. The cash book is a subsidiary boo and it is part of the principal book called ledger.

What will the balance as per the cash book be in the case. To reconcile the bank balance as shown in the pass book with the balance shown by the cash book, bank reconciliation statement is prepared. Explain the meaning of cash book, pass book, and petty cash book. In order to ascertain the correct cash book balance, we need to prepare corrected adjusted cash book. Interest credited by the bank but entered in cash book. Differences between cash balances of bank and cash book.

In a journal when the subsidiary book, cash book is not being maintained. A comparison of pass book and cash book revealed the following. Funds on deposit prior to any adjustment for check clearing, float funds or reserve requirements. Cash book is prepared by the firms whereas passbook is written by banks and retained by. Difference between cash book and passbook with comparison.

Reasons for disagreement between cash book and pass book. Key differences between cash book and cash account. The cheques paid into bank for collection but not credited into the account of the customer, because the cheque is. So the cheques issued will decrease the balance in our books but in pass book it is not reflected so to match it with it we are reversing the cheque issued by adding to the balance. A cashbook is an accounting book that is composed of cash receipts plus disbursements. Jun 29, 2008 difference between cash book and pass book in accounting terms. Jan 08, 2018 key differences between cash book and passbook.

The book balance is the term banks use to describe the amount of money available. A cash book is a type of subsidiary book where cash or bank receipts and cash or bank payments made during a period are recorded in a chronological order. Checks deposited for collection but not yet collected and credited by the bank. Why there is a difference between cash account in the camponys book and bank statement balance in bank. Learn timing difference between cash book and bank pass book. How to make bank reconciliation statementvideo2 reasons. Timing difference between cash book and bank pass book if suppose your bank statement is not matching with your cash book and found the differences. Outstanding checks deposits in transit bank service charges and check printing charges errors on the companys books ele.

For this, there will be a disagreement between cash book and pass book. Reconciling a bank account implies ensuring that the bank account balance as per the cash book is agreeing with the balance as per the pass bank book after taking into consideration all the reasons for the difference in the balance. Cheques issued but not presented for payment by creditor, here we are preparing brs by taking bank balance from cash book to arrive the bank balance as per passbook. What is the difference between journal and cash book. The cash account is a ledger account and so posting in a cash account is made only when the original entry of the transaction is made. Typically it is the ending balance on the bank statement for each month.

The balance on june 30 in the companys general ledger account entitled checking account is the book balance that pertains to the bank account being reconciled. There is a column of journal folio in cash account, whereas you can find the. Difference between a cash book balance and bank statement. Double column cash book explanation, format, example. The bank reconciliation statement is the process of checking the differences between a bank column of the cash book and the bank statement or passbook. A bank reconciliation statement may be defined as a statement showing the items of differences between the cash book balance and the pass book balance, prepared on any day for reconciling the two balances. If one looks at the debit side of the cash book and the deposits column of the pass book.

Both balances are equal but opposite generally these two balances do not agree. Sometimes, the bank balance as per cash book and passbook does not tally with each other, then we can know the difference between them by preparing the bank reconciliation statement. Withdrawals of cash entered on the credit side of the cash book. After identifying the reasons of difference, the bank reconciliation statement is prepared without making change in the cash book balance. Difference between cash book balance and bank statement. Sep 15, 2015 cheques issued but not presented for payment by creditor, here we are preparing brs by taking bank balance from cash book to arrive the bank balance as per passbook. This will increase the balance in the pass book and a difference in the two balances will exits unless a corresponding entry is recorded in the cash book by the firm. Ncert solutions for class 11 commerce accountancy chapter. Book balance book balance may be referred to as the balance per books, and it is the amount shown in the companys records. Reasons for difference between bank balances as per cash book and pass book. In cash book, entries are followed by narration, but in a cash account, the entries are not accompanied by narration. The formatspecimen of a double column cash book is given below. This balance is posted to the cash account in the ledger. Causes of disagreement between the balance shown by the cash.

What are some reasons that cause the balance on the bank. Sep 11, 20 flow of presentation introduction objectives cash book types of cash book simple cash book two column cash book three column cash book petty cash book pass book bank reconciliation statement meaning causes for difference between cash book balance and passbook balance. Explain the meaning, need and importance of bank reconciliation statement. The reasons for the difference between the balance on the bank statement and the balance on the books consist of outstanding checks, deposits in transit, bank service charges, check printing charges, errors on the books, errors by the bank, electronic charges on the bank statement not yet recorded in the books, and electronic deposits on the bank statement that are not yet recorded in the books. Receipts are recorded on the debit the left hand side, and payments are recorded on the credit right hand side. Cash book is written by depositor and pass book is written by the bank.

The following are the important causes or reasons for the disagreement between the balances shown by the pass book and cash book. A transaction relating to bank has to be recorded in both the books i. To do a bank reconciliation you would match the cash balances on the balance sheet to the corresponding amount on your bank statement, determining the differences between the two in order to make changes to the accounting records, resolve any discrepancies and identify fraudulent transactions. It is also known as the balance per bank or balance per bank statement. The difference between this two books are cash book maintained by an individual whereas pass book is maintained by a bank. A bank reconciliation statement is prepared to know the causes for the difference between. Cheques paid or deposited but not collected and credited by the bank. Therefore, there is no difference in the bank balance as revealed by both the books. So long the check is not presented to the bank, the cash book balance and the pass book balance will differ. All transactions related to bank are recorded in the bank column of the cash book and these transactions are also recorded in the pass book by the bank. Bank reconciliation statement process illustration. Difference between cash book and pass book gyan post. Difference between cash book and pass book qs study.

Key difference cash book balance vs bank statement balance cash balance at the bank of a company and the cash balance maintained at the. The bank reconciliation statement is an additional statement that is prepared to serve some purpose, i. For example, the book balance at june 30 refers to the balance in the companys general ledger account cash or checking account. Since a double column cash book provides cash as well as bank balance at the end of a period, some organizations prefer to maintain a double column cash book rather than maintaining two separate ledger accounts for recording cash and bank transactions.

However, contrary to the bank statement, the passbook offers fewer details, replacing easytounderstand descriptions with short codes, also known as mnemonics. Aug 1 st cash book 18,000 pass book 18,000 the transaction has been recorded on the same date in both the books. Whereas in pass book we enter all the day to day bank transaction whether it is a cash, cheque or dd. Dec 25, 2018 difference between cash book and pass book gyan post. Therefore, the bank ac balance as shown by the cash book would be the balance that appears in the balance sheet. Reasons a bank balance will differ from a companys balance. When cheque are issued then immediately make entry in. Difference between cash book balance and bank statement balance. What are the reasons for differences between bank statement balance and cash book and passbook balance.

The cash book is updated from original accounting source documents, and is therefore a book of prime entry and as such, can be classified as a special journal. For an individual, the book balance is likely to be the balance appearing in the persons check register. Deposits of cash entered on the debit side of the cash book. If one looks at the debit side of the cash book and the deposits column of the pass book, and checks item by item, one. A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. Unanswered questions has mick hucknall had a face lift and botox. All cash transaction with cheque must pass through the cash book. Discuss the causes for difference between the balances of pass book and cash book. Causes of disagreement between the balance shown by the.

Here we detail about the eleven major causes of difference between cash balances of bank and cash book. Reasons of difference between cash book and pass book balance and reconciling these two get the answers you need, now. It is prepared to bring the cash book balance in agreement with the balance as per pass book. In the bank column of cash book when the subsidiary book is being maintained. Flow of presentation introduction objectives cash book types of cash book simple cash book two column cash book three column cash book petty cash book pass book bank reconciliation statement meaning causes for difference between cash book balance and passbook balance. Passbook is issued by the bank to the account holder that records the deposits and withdrawals. The cheques paid into bank for collection but not credited into the account of the customer, because. When the cheque is issued, the cashieraccountant of the business enterprise records this transaction on the credit side of the cash book under the bank column immediately. Difference between cash book and pass book youtube.

All the cash transactions as well as bank transactions are recorded here. Why there is a difference between cash book and bank. The cash book shows a balance of rs 33,000, whereas the pass book shows a balance of rs 39,930. Difference between cash book and cash account with. The pass book balance or any given data must be the same as the balance shown by the bank column of the cash book on the same date. Difference between cash book and pass book in accounting. The reason responsible for the difference may be delay in intimation, time gap between recordings of transaction in cash book and pass book due to errors and omissions in cash book and pass book.

If the causes of disagreement between the cash book and pass book balances are given, the bank reconciliation statement can be prepared either by taking the balance of cash book or pass book. We may have the following different situations with regard to balances. In cash book we enter day to day expenses incurred i. Difference in calculated book balance and general ledger. The cash account is a ledger account and so posting in a cash account is made only when the original entry of the transaction is made somewhere else. The cashbook account in the companys books reflects all cheques written to suppliers and. On the other hand, a cash account is a ledger account. The bank reconciliation statement can be prepared by using either of the following bases. Apr 26, 2019 the points given below are noteworthy, so far as the difference between cash book and cash account is concerned. If there is any difference between the balance as per cash book and pass book i. Bank reconciliation statement common proficiency test. Reasons for difference in pass book and cash book balances. If the bank collects dividend on shares, interest on investments, etc on behalf of its customer, it credits the amount in the pass book. Some of the reasons for a difference between the balance on the bank statement and the balance on the books include.

Generally, differences between the cash book and the pass book arise due to the reason that items have not been recorded in the cash book. Jan 06, 2020 cash book refers to the book maintained by the customer at his end wherein the entries affecting the bank balance are recorded immediately irrespective of the fact as regards realisation of the cheque or debit of the cheques issued by him. The paramount differences between cash book and pass book are explained in the given below points. So, if the bank columns of the cash book show a debit balance as on a specified date, the bank statement should show an equal amount of credit balance as on that date and viceversa. The term bank balance is commonly used when reconciling the bank statement. When a check is received from a debtor, it is recorded in the cash book on the. Difference in calculated book balance and general ledger balance elena over 11 years ago is there a reason why, even when you have reconciled your bank statement with your general ledger, there should be a discrepancy between the calculated book balance on the reconciliation print report and the general ledger balance for that cash account. Sep 27, 2011 in order to see the difference between a bank balance and cash book, and see whether cheques or deposit made all appear in the bank statement asked in business accounting and bookkeeping. Bank reconciliation statement i examples i format i problems. Causes of disagreement between the balance shown by the cash book and the balance shown by the pass book.

Bank reconciliation cash book serves the purpose of cash account and bank account of the firm. Causes of disagreement between depositors book and bank. Jun 07, 2014 book balance book balance may be referred to as the balance per books, and it is the amount shown in the companys records. Our account is debited with bank charges and interest on overdraft and intimation is sent to us by the bank. What are some reasons that cause the balance on the bank statement to differ from the cash balance on the books. You also observed a few items which are recorded in the bank passbook but not recorded in the cash book. Overdraft balance as per pass book part 1 bank reconciliation statement. The below given steps are involved in the preparation of corrected adjusted cash book. There are certain reasons due to which a difference in the balance of pass book and cash book take place. Causes of disagreement between cash book and pass book. Reasons of difference between cash book and pass book. Normally a firm make payments through bank, it means a cheque or a demand draf. Procedure for preparation of bank reconciliation statement. No basis of distinction cash book bank column pass book 1.