Apr 26, 2019 key differences between cash book and cash account. Objectives explain the meaning of cash book, pass book, and petty cash book. Prepared by the customer himself 2 recording of cheque received. Differences between cash balances of bank and cash book. In cash book, the receipts will be shown on the debit side. The balance of cash book and balance of pass book will differ. The relationship between the customer and the banker is that of a creditor and a debtor. 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.
Withdrawals of cash entered on the debit column of the pass book. 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. This book begins with the introduction to bank reconciliation statementbrs, need of brs, most commonly used terms, reasons for differences in cash book and pass book, case study with solution in 4 ways with bank reconciliation statements and conclusion. The cash book and pass book bank statement are prepared separately. Reasons for disagreement between cash book and pass book. Cash book the cash book is a ledger in the sense that it is designed in the form of a cash account and records cash receipts on the debit side and cash payments on the credit side. Explain the meaning of cash book, pass book, and petty cash book. Cash book deals with cash transactions and pass book deals with bank transaction. The businessman prepares the cash book and the pass book is prepared by the bank here by cash book we mean two or three column cash book. A firm or an individual prepares it to reconcile the causes of difference between the bank balance as per cash book and the bank balance as per pass 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. The difference between the left and right sides shows the balance of.
Feb 28, 2019 bank reconciliation cash book serves the purpose of cash account and bank account of the firm. What are some reasons that cause the balance on the bank. Jan 08, 2018 key differences between cash book and passbook. This record will be debited with remittances received and credited with revolving fund checks drawn. What do you understand by bank pass book what is the impact of ifrs. Whereas in pass book we enter all the day to day bank transaction whether it is a cash, cheque or dd. Cash book is the record for the account holder the bank customer and pass book is record for the bank i.
The points given below are noteworthy, so far as the difference between cash book and cash account is concerned. Bank reconciliation statement part 1 important for ugc. 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. 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. Thus, a document evidencing cash receipts and payments and forming the basis for making entries in the cash book is called cash voucher. Apr 01, 2012 most often the difference between the cash book and the bank passbook is due to the difference in the time period. The main reasons for differences between the cash book and the bank statement.
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. Cash book is written by depositor and pass book is written by the bank. It works as a book of original entry as well as a ledger account. First of all you should know who has which book with them. Difference between cash book and pass book qs study. Petty cash book is an accounting book used for recording expenses which are small and of little value, for example, stamps, postage and handling, stationery, carriage, daily wages, etc these are expenses which are incurred day after day. There are four major types of cash book that companies usually maintain to account for their cash flows. 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. Cheques paid or deposited but not collected and credited by the bank. Common reasons for accounting discrepancies exploring the. The difference in timing recording the transactions the difference in timing can be caused by many factors. 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. The bank reconciliation statement helps in explaining the differences in the amount between the companys cash book and bank balance. Distinction between cash book and pass book, accounting lecture.
Explain the meaning, need and importance of bank reconciliation statement. Passbook is issued by the bank to the account holder that records the deposits and withdrawals. Therefore, there is no difference in the bank balance as revealed by both the books. The entries related to receipt and payment of cash are first recorded in the cash book and then posted to the relevant ledger accounts. On the debit side of the cash book 3 recording of cheque paid. But as both the books are related to one person and same transactions are recorded in both the books so the balance of both the books.
The cash book is used to record receipts and payments of cash. In order to avoid such difficulty every business firm prepares a separate statement to balance those two books. Bank reconciliation statement i examples i format i problems. The bank often makes charges for services it renders. A copy of it is also given to the customer for the knowledge in the form of a pass book or a statement of account. 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. What is the difference between cash book and cash flow.
A cash book is an exceptional journal which is used to record all cash receipts and cash payments. Deposits of cash entered on the debit side of the cash book. 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. You also observed a few items which are recorded in the bank passbook but not recorded in the cash book. The cash book normally will be a debit, credit, and balance record. Difference between cash book and pass book in accounting. Cash book contains cash transactions passing into and out of a business. 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. Causes of difference in cash book and pass book hindi bank reconciliation statement. Most often the difference between the cash book and the bank pass book is due to the difference in the time period. What is the difference between bank book and cash book.
Posting is done to the bank ac as well as the other account affected by the transaction. 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. Reasons for difference in pass book and cash book balances. 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. In a journal when the subsidiary book, cash book is not being maintained. Entries in the cash book are then posted into the general. I f youve wondered what the difference is between a passport book and a passport card, youve come to the right place. Cheques deposited for collection entered in the pass book only on the date of the realization of the cheque cheques issued entered on the debit column of the pass book only on the date on which they are presented and paid. 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.
A cash book is a financial journal that contains all cash receipts and. Eleborate the difference between bank book and cash book. Reasons for difference between bank balances as per cash book and pass book. What is the difference between a cash book and a passbook in. Dec 18, 2007 a cash book, it is a book which contains a summary of debits and credits of your cash account. Reasons a bank balance will differ from a companys balance. Cash book is prepared by the firms whereas passbook is written by banks and retained by. A passbook is a book which the bank issues to the account holder for the purpose of recording such transactions. Bank reconciliation statement process illustration. The double column cash book also known as two column cash book has two money columns on both debit and credit sides one to record cash transactions and one to record bank transactions. In fact, cash book is a substitute for a cash account.
A transaction relating to bank has to be recorded in both the books i. Subscribe to our youtube channel to watch more accounting lectures. A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. Distinction between cash book and pass book youtube. Debit balance shows cash at the bank while the credit balance shows overdraft. A company that properly maintains a cash book does not need to open a cash account in its ledger. Receipts are recorded on the debit the left hand side, and payments are recorded on the credit right hand side.
Sometimes, there may be a difference between these two books i. Causes of difference in cash book and pass book in hindi. The cash book and the bank passbook differences are caused by. Withdrawals of cash entered on the credit side of the cash 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. This balance is posted to the cash account in the ledger. The cash book shows a balance of rs 33,000, whereas the pass book shows a balance of rs 39,930. Dec 29, 2017 explain the causes of differences between the cash book and pass book. Money deposited is recorded on the debit side and money was withdrawn on the credit side. Differences between a passport book and passport card. 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. Difference between cash book and cash account with. In cash book we enter day to day expenses incurred i. What is the difference between cash book and cash account.
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. In the bank column of cash book when the subsidiary book is being maintained. Difference between cash book and passbook with comparison. Cheques deposited for collection entered on the debit side of the cash book on the date of depositing the cheques into the bank. The main features of the book are simple understanding and key concepts. Reasons for differences between cash book and pass. No basis of distinction cash book bank column pass book 1. 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. All the cash transactions as well as bank transactions are recorded here. If one looks at the debit side of the cash book and the deposits column of the pass book. Money deposited into a bank is recorded in the bank column of a cash book on the debit side while withdrawals are recorded on the credit side. The paramount differences between cash book and pass book are explained in the given below points.
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. Interest credited by the bank but entered in cash book. Learn timing difference between cash book and bank pass 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. 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. Sep 11, 20 objectives explain the meaning of cash book, pass book, and petty cash book. What is reconciling the bank account balances as per cash book and pass book. Aug 1 st cash book 18,000 pass book 18,000 the transaction has been recorded on the same date in both the books. Difference between cash book and pass book youtube. Difference between cash book and pass book cash book keeps a record of cash transactions. Distinction between a cash book and a cash account. Moreover, a cash book is a substitute for cash account in the ledger. The difference between this two books are cash book maintained by an individual whereas pass book is maintained by a bank. General cash book is subdivided in the single column, double column, and treble column cash book.
Discuss the causes for difference between the balances of pass book and cash book. The post office savings bank introduced passbooks to rural 19th century britain traditionally, a passbook is used for accounts with a low transaction volume, such as savings accounts. There is a very thin line of difference between cash book and cash account, which most of the people dont even know. In that situation we need to correct either cash book or pass book, it may be difficult and confusing. Some of the reasons for a difference between the balance on the bank statement and the balance on the books include. If the bank collects dividend on shares, interest on investments, etc on behalf of its customer, it credits the amount in the pass book. Cash book just shows the cash receipt and cash payment without distinguishing for which purpose cash is paying out while in cash flow statement difference is shown to determine that cash is coming. What is a cash book definition, explanation and types. A passbook or bankbook is a paper book used to record bank or building society transactions on a deposit account. A firm may prepare it at any time during the financial year, as and when required. A cashbook is an accounting book that is composed of cash receipts plus disbursements.
Double column cash book explanation, format, example. Difference between cash book and passbook difference wiki. In other words, we can say that if we add a bank column to both sides of a single column cash. The following are the important causes or reasons for the disagreement between the balances shown by the pass book and cash book. What is the difference between a cash book and a passbook. What are some reasons that cause the balance on the bank statement to differ from the cash balance on the books. Explain the causes of differences between the cash book and. If there is an overdraft, the bank will also charge interest. Jun 29, 2008 difference between cash book and pass book in accounting terms. Brs is not prepared on every instance of a difference between cash book balance and bank pass book balance. Pass book copy of customer account in bank books we assume that the cheques received by the organisation have been deposited into the bank account and the cheques issued to outsiders have been presented for payment to the bank. Cash book is written by depositor and pass book is written by.
1140 1270 62 527 1438 421 600 538 360 1231 524 1548 395 689 270 727 505 883 1335 745 315 1065 1511 794 271 102 1193 1355 784 729 833 391 971 401 1268 13 580 1400 1195 1041