Reasons: Difference between Balances as per Cash Book and Bank Pass Book
i. 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.
• Cheques issued but not yet presented for payment
In a cash book, the cheques issued for payment are recorded without any delay. But the bank records the entry only when the cheque is presented to them for payment. Hence, there is a time gap between the entry made in the cash book and the one made in the bank pass book. While preparing the bank reconciliation statement, the date of issue of cheque and presentation of the cheque to the bank for payment will vary. For example, a cheque of Rs.10,000 was issued on 4th June, 2016 and presented to the bank on 12th July, 2016. This information will be recorded in the cash book on 4th June while the bank will record it on 12th July, 2016. Hence, the cash book balance will be lesser by Rs.10,000 on 30th June 2016.
• Cheques deposited in the bank but not yet cleared
Cheques deposited in the bank are entered on the debit side of the bank column of the cash book on the date of deposit. But the bank credits the account holder’s account only when it receives the payment from the other bank. Hence, there is a time gap between the deposit of cheques and the credit given by the bank. The bank balances will differ on a particular date as per the cash book and the bank pass book. For example, a cheque of Rs.10,000 deposited in the bank on 4th June, 2016 and presented to the bank on 12th July, 2016. This information will be recorded in the cash book on 4th June while the bank will record the cheque collected on 12th July, 2016. Hence, the cash book balance will be higher by Rs.10,000 on 30th June 2016.
ii. Errors and Omissions
There may be some errors or omissions in the cash book or bank pass book. For example, a cheque of Rs.30,000 deposited in the bank is recorded as Rs.3,000 in the cash book i.e. over or under casted the amount in the bank column of the cash book. This is an error committed in the cash book. Similarly, when a cheque of Rs.10,000 collected by bank on behalf of the account holder, say, Mr. Arun, is entered in the account of Mr. Varun. This is an error committed in the bank pass book. In this way, there is a difference in the balances of cash book and that of the bank pass book.
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Gaurav Seth 5 years, 5 months ago
Reasons: Difference between Balances as per Cash Book and Bank Pass Book
i. 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.
• Cheques issued but not yet presented for payment
In a cash book, the cheques issued for payment are recorded without any delay. But the bank records the entry only when the cheque is presented to them for payment. Hence, there is a time gap between the entry made in the cash book and the one made in the bank pass book. While preparing the bank reconciliation statement, the date of issue of cheque and presentation of the cheque to the bank for payment will vary. For example, a cheque of Rs.10,000 was issued on 4th June, 2016 and presented to the bank on 12th July, 2016. This information will be recorded in the cash book on 4th June while the bank will record it on 12th July, 2016. Hence, the cash book balance will be lesser by Rs.10,000 on 30th June 2016.
• Cheques deposited in the bank but not yet cleared
Cheques deposited in the bank are entered on the debit side of the bank column of the cash book on the date of deposit. But the bank credits the account holder’s account only when it receives the payment from the other bank. Hence, there is a time gap between the deposit of cheques and the credit given by the bank. The bank balances will differ on a particular date as per the cash book and the bank pass book. For example, a cheque of Rs.10,000 deposited in the bank on 4th June, 2016 and presented to the bank on 12th July, 2016. This information will be recorded in the cash book on 4th June while the bank will record the cheque collected on 12th July, 2016. Hence, the cash book balance will be higher by Rs.10,000 on 30th June 2016.
ii. Errors and Omissions
There may be some errors or omissions in the cash book or bank pass book. For example, a cheque of Rs.30,000 deposited in the bank is recorded as Rs.3,000 in the cash book i.e. over or under casted the amount in the bank column of the cash book. This is an error committed in the cash book. Similarly, when a cheque of Rs.10,000 collected by bank on behalf of the account holder, say, Mr. Arun, is entered in the account of Mr. Varun. This is an error committed in the bank pass book. In this way, there is a difference in the balances of cash book and that of the bank pass book.
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