What is cash book and passbook

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what is cash book and passbook

Features of BRS: Differences between Cash Book and Pass Book

Cheques received are entered in the Cash Book as soon as they are received. There may be a delay of a day or two in sending the cheques to the bank. Moreover, the bank, usually, does not credit the customer until the cheques are realized; if they are on other banks, it means delay. As soon as cheques are issued, they are entered in the Cash Book, but the bank, again, makes no entry until the cheques are actually presented for payment and are paid. This means that the bank shows a higher balance in favour of the client than what the Cash Book of the client shows. The bank often makes charges for services it renders; these are known as bank charges.
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Published 20.12.2018

Causes of Disagreement between Cash Book and Pass Book

Features of BRS

Ans : A bank reconciliation statement is prepared for finding out the causes for the difference between the balances of a cash book and passbook, and to reconcile their balance. Ans : Overdraft means the amount overdrawn from the bank. Ans : Minus balance indicates a financially unsound position of the firm, where the bank has paid more on our account than what we have deposited into the bank. Will the preparation of Bank Reconciliation Statement rectify the errors that have crept into the Passbook or Cash Book? What will be the effect of the interest charged by the bank if there is an overdraft balance? Ans : The bank will debit the amount of interest to our account, and thus our bank balance will decrease as per the passbook or the amount of loan or overdraft will increase.

The cash book shows a balance of Rs 33,, whereas the pass book shows a balance of Rs 39, 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 will find that the following cheques deposited with the bank were not credited by the bank till 31st January, Had these cheques been credited by the bank also, as they have been debited in the cash book, the pass book balance would have been Rs 44,, i. The two cheques total Rs 9, Had these cheques also been paid like others, the balance at the bank as shown by the pass book would have been only Rs 44, — Rs 9, or Rs 35, There is no entry in the cash book. Had the pass book also ignored this item as is the case with the cash book for the time being, the balance at the bank as per pass book would have been only Rs 32,, i.

Explanation of Difference:

There are end number of transactions occur in the normal course of business, where in receipt or payment is made in cash or cheque. To record these transactions the entity uses cash book and contains all the details of the receipts and disbursements that are recorded chronologically. Many times cash book is juxtaposed with Passbook, but there is a slight difference in the two. With the help of pass book, banks inform their customer about the status of their account. There are a few differences between cash book and pass book which are discussed in this article in detail, have a look.

A cash book is a financial journal that contains all cash receipts and disbursements, including bank deposits and withdrawals. Entries in the cash book are then posted into the general ledger. A cash book is set up as a subsidiary to the general ledger in which all cash transactions made during an accounting period are recorded in chronological order. Larger organizations usually divide the cash book into two parts: the cash disbursement journal which records all cash payments, and the cash receipts journal, which records all cash received into the business. The cash disbursement journal would include items such as payments made to vendors to reduce accounts payable , and the cash receipts journal would include items such as payments made by customers on outstanding accounts receivable or cash sales.

3 thoughts on “Difference Between Cash book and Passbook (with Comparison Chart) - Key Differences

  1. There is a slight difference between cash book and passbook, that is cash book keeps a record of cash transactions whereas passbook is.

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