Generally, the bank allows overdraft facility to traders on current. Prepared by the customer himself 2 recording of cheque received. Subscribe to our youtube channel to watch more accounting lectures. This will cause the difference between two balances. Difference between cash book and pass book in accounting. Such charges and commission is debited in the passbook but no entry is recorded in the cash book unless the firm obtains the passbook from the bank and record these entries. However, contrary to the bank statement, the passbook offers fewer details, replacing easytounderstand descriptions with short codes, also known as mnemonics. In the above paragraphs, we have discussed the general points that have to be kept in view while preparing the bank reconciliation statement. Key differences between cash book and cash account. Our guide will show you the uses and advantages of each document, and will help you figure out which one is best for you, or if you should have both. Cash book deals with cash transactions and pass book deals with bank transaction.
Reasons for difference between bank balances as per cash book and pass book. A cash book is a financial journal that contains all cash receipts and. Most often the difference between the cash book and the bank pass book is due to the difference in the time period. 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. Home page download material accounting topics accounting dictionary financial calculators. What is the difference between bank book and cash book. On the debit side of the cash book 3 recording of cheque paid.
Difference due to timing there is always a difference in the time gap between recording the transactions in the books of account and those recorded by the bank. This is because the time period of the bank posting the transactions in the bank column of the cash book might not march to the period of the firms pass book posting. No basis of distinction cash book bank column pass book 1. Explain the meaning of cash book, pass book, and petty 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.
I f youve wondered what the difference is between a passport book and a passport card, youve come to the right place. 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. The bank pass book indicates the amount paid into the bank and the amount. Causes of differences between the cash book and the pass book are. Passbook is issued by the bank to the account holder that records the deposits and withdrawals.
A bank reconciliation statement brs refers to a statement which a firm prepares to reconcile the causes of difference between bank balance as per cash book. Ncert solutions for class 11 commerce accountancy chapter. Transactions, like interest allowed by bank on the deposits, bank charges, etc. After getting intimation from the bank, these are recorded. The main difference between cash book and passbook is that cashbook saves the records of cash dealings, whereas the passbook is providing by the banks to their account holders to record the payment and withdraw of money. Entries are recorded just like a ledger account with the help of. Difference between cash book and passbook difference wiki.
Objectives explain the meaning of cash book, pass book, and petty cash book. 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 is prepared in two ways. 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. What is the difference between a cash book and a passbook in a.
Brs is not prepared on every instance of a difference between cash book balance and bank pass book balance. 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. The title of debit and credit columns has been changed to. What is the advantage of a passbook savings account. Whereas in pass book we enter all the day to day bank transaction whether it is a cash, cheque or dd. Periodically, the cash book is tallied with the bank passbook for all the. Learn timing difference between cash book and bank pass.
What are the causes of disagreement between cash book and pass book. Cash book is maintained by the individual who enters day to day transaction pertains to receipts and payments whereas passbook is issued by the bank to the account holder having deposits and withdrawals with that bank. The cash book shows a balance of rs 33,000, whereas the pass book shows a balance of rs 39,930. Detailed difference between cash book and cash account with. Discuss the causes for difference between the balances of pass book and cash book. 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. This balance is posted to the cash account in the ledger. The paramount differences between cash book and pass book are explained in the given.
These differences between cash book and passbook arise either due to timing differences in recording transactions in respect of payments and receipts or errors on the part of business entity or bank in recording transactions. Causes of disagreement between cash book and pass book. All transactions related to a bank are recorded in the bank column of the cash book and these transactions are also recorded in the pass book by the bank. Difference between a cash book balance and bank statement. Deposits of cash entered on the debit side of the cash book. The difference between the left and right sides shows the balance of. Cash book refers to the book maintained by the customer at his end wherein the entries affecting the bank balance are recorded immediately.
Here we detail about the eleven major causes of difference between cash balances of bank and cash book. We have to check all the transaction recorded in the cash book with transactions recorded in passbook by our bank. Differences between a passport book and passport card. The difference between this two books are cash book maintained by an individual whereas pass book is maintained by a bank. A bank reconciliation is a statement prepared mainly to reconcile the differences shown between the bank column of the cash book and the pass book.
If you are looking to make a high return on your money, a passbook savings account is not a good option. Identify the main reasons for differences between the cash book and the bank statement. Distinction between cash book and pass book, accounting lecture. In cash book we enter day to day expenses incurred i. A passbook is a book which the bank issues to the account holder for the purpose of recording such transactions. Cash book is written by depositor and pass book is written by the bank. How to prepare a bank reconciliation statement when. The main disadvantage to passbook savings account is their low interest rates. Cheques deposited for collection entered on the debit side of the cash book on the date of depositing the cheques into the bank. A cashbook is an accounting book that is composed of cash receipts plus disbursements. What are the reason for difference between cash book and pass book get the answers you need, now. Difference between balances as per cash book and bank pass book. Cash book is written by depositor and pass book is written by.
Reasons a bank balance will differ from a companys balance. According to, the average national apy was less than 1 percent as of december 2010. Withdrawals of cash entered on the credit side of the cash book. It is generally prepared as an annexure to the accounting period end financial statements to explain the difference between the balance as shown in the books and the balance shown by the supporting document i. Explain the meaning, need and importance of bank reconciliation statement.
Receipts are recorded on the debit the left hand side, and payments are recorded on the credit right hand side. 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. Distinction between cash book and pass book youtube. 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. You also observed a few items which are recorded in the bank passbook but not recorded in the cash book. A transaction relating to bank has to be recorded in both the books i.
The balance on the cash account which should be the same as the balance in the cash book is compared to the balance on the bank statements at a given date. In other words we can say that always opposite entry in cash book and pass book. Eleborate the difference between bank book and cash book. Bank reconciliation statement brs refers to a statement which an entity prepares on a particular date to match the bank balance indicated in the cash book with the balance shown by the banks passbook, by displaying the reasons for differences between the two. One of the major advantages of having a passbook savings account is that the fdic insures your money. Some of the reasons for a difference between the balance on the bank statement and the balance on the books include. Difference between cash book and pass book youtube. 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.
Difference between cash book and cash account with. Put the difference as balance as per cash book pass book or overdraft balance as per cash book pass book as the case may be. What are some reasons that cause the balance on the bank statement to differ from the cash balance on the books. A cash book is an exceptional journal which is used to record all cash receipts and cash payments. The difference can be stated as follows a sometime cheque issued to party on time but they make a delay in depositing to their bank for further real. What is the difference between a cash book and a passbook. 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. 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. The points given below are noteworthy, so far as the difference between cash book and cash account is concerned. Difference between cash book and passbook with comparison. Basic statistics assignment help, differences between a cash book and bank passbook, accounting, state the main reason because of which the differences between a cash book and bank passbook. This difference in the two respective dates leads to a mismatch between the pass book and the bank balance of the cash book. The paramount differences between cash book and pass book are explained in the given below points. Reasons for difference in pass book and cash book balances.
Preparing the bank reconciliation statement 2 methods. Differences between cash balances of bank and cash book. A bank reconciliation statement brs refers to a statement which a firm prepares to reconcile the causes of difference between bank balance as per cash book and bank balance as per pass book or bank statement. Common reasons for accounting discrepancies exploring. Bank reconciliation statement i examples i format i problems. 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. What are some reasons that cause the balance on the bank. In one method you start from cash book and reach to passbook balance, in other method we start from pass book balance and reach to our cash book balance but the best method in my opinion is. What are the reason for difference between cash book and. Difference between cash book and pass book qs study. The relationship between the customer and the banker is that of a creditor and a debtor. Bank reconciliation statement process illustration. Bank reconciliation is prepared to know differences between bank book and passbook, when we do the bank reconsilation will get mainly four differences.
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