Difference between cashbook and bank book

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difference between cashbook and bank book

Difference Between Cash book and Passbook (with Comparison Chart) - Key Differences

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. A cash book and a cash account differ in a few ways.
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Distinction between Cash book and Pass Book

Reasons for Difference in Cash Book and Pass Book

Entry in the Books of Accounts Trade discount does not appear in the books of accounts. Direct deposits in Bank account: Sometimes customers or others directly deposit an amount in the Bank. In this intervening period, the bank statement issued by the bank definitely shows higher bank balance than the balance shown by the bank column of cash book. Passbook is issued by the bank to the account holder that records the deposits and withdrawals.

Items appearing in Cash Book but not appearing in Bank Pass Book: Cheques issued but not debited by the Bank: The reason for this may be that the payee did not bank these cheques or they may still be under clearance. In these cases, the balances appearing in both the books are not the same. However, the business enterprise will record this transaction only on receipt of such advice from the bank. Because the cash book is updated continuously, it will be in chronological order by the transaction?

keeps a record of cash transactions.
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What is Cash Book Balance?

Bank Reconciliation Updating the Cash Book

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.

Updated

Raj Mohan maintains two accounts, the firm shall make an entry in the books immediately thereby increasing the balance! The bank reconciliation statement is prepared that helps to reconcile the two books as a measure of internal auditing. But, known as account no. A debit of Rs.

Bank doesnot credit the amount of the depositor. In other words, the balance shown by the bank column of cash book would be lower than the balance shown by the bank statement to the extent of amount of interest credited by the bank. A PassBook is a book which the bank issues to the account holder for the purpose of recording czshbook transactions. However, the business enterprise will record this transaction only on receipt of such advice from the bank.

2 COMMENTS

  1. Chelsea H. says:

    Deposit in transit

  2. Daniel C. says:

    Here we detail about the eleven major causes of difference between cash balances of bank and cash book. The effect of this recording is that the bank balance in cash book will be reduced by the amount of cheque issued. However, bank debit the account of the business enterprise only when the concerned party to whom cheque has been issued presents the cheque for payment. It should be noted that there is an inevitable gap between the date of issuance of cheque and date of presentation of cheque to the issuing bank. Sometimes the party intentionally presents the cheque after a considerable delay say after two months. 😍

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