1.

Cash Book And Pass Book Record Same Details On

Opposite Sides
The same transactions of deposits and payments are recorded for the same
amounts both by the depositor in his cash book and by the bank in the pass
book , but on opposite sides , as is clear from following chart

TRANSACTIONS ENTRY IN CASH BOOK ENTRY IN PASS BOOK

Deposits into bank Debit bank A/c Credit Depositor’s A/c
Payment from bank Credit bank A/c Debit Depositor’s A/c
2. Reason for difference

• A Cash Book records in the bank columns each deposit and payment as
well as the balance of the bank account. Similarly , the pass book given
by the bank to its account-holder records each deposits and payment
as well as the balance .
• So , in theory , the balance amount in both the cash book and the pass
book should be same. However in practice , the balance amount in
both book may be different on a particular day because of the time lag
in recording in the two books .
 TRANSACTIONS TIMING OF RECORDING IN TIMING OF RECORDING IN PASS BOOK
CASH BOOK (CB) (PB)

1 CASH DEPOSITS WHEN CASH IS DEPOSITED WHEN CASH IS DEPOSITED

2 CASH WITHDRAWN WHEN CASH IS WITHDRAWN WHEN CASH IS WITHDRAWN
3 CHEQUE ISSUED WHEN CHEQUE IS ISSUED WHEN CHEQUE IS PRESENTED FOR
PAYMENT
4 CHEQUE DEPOSITED WHEN CHEQUE IS DEPOSITED WHEN CHEQUE IS COLLECTED
5 BANK CHARGES WHEN PASS BOOK IS RECEIVED WHEN CHARGES ARE LEVIED
6 INTEREST CHARGED BY WHEN PASS BOOK IS RECEIVED WHEN INTEREST IS CHARGED BY THE
BANK BANK
7 INTEREST ALLOWED BY WHEN PASS BOOK IS RECEIVED WHEN INTEREST IS ALLOWED BY THE
BANK BANK
8 DIRECT PAYMENT ON WHEN PASS BOOK IS RECEIVED WHEN PAYMENT IS MADE BY THR BANK
BEHALF OF CUSTOMERS
9 DIRECT COLLECTION ON WHEN PASS BOOK IS RECEIVED WHEN AMOUNT IS COLLECTED BY THE
BEHALF OF CUSTOMERS BANK
10 DISHONOUR OF CHEQUE WHEN PASS BOOK IS RECEIVED WHEN CHEQUE IS DISHONOURED
• Thus , the time lag in making entries in the two books is the main
reason for the difference in the balances shown by the cash book and
the pass book. The difference may also be due to an error in writing
of totalling the cash book or the pass book.
• Due to this errors , one book may show a larger balance as compared
to the other book. Suppose our cash book shows a larger balance as
compared to our pass book, this may be because :
(a) Our cash book shows excess deposits
(b) Our cash book shows less payments
(c) Our pass book shows less deposits
(d) Our pass book shows excess payments.
3. Bank Reconciliation Statement
• Meaning : When the balance of our cash book and pass book do not
agree, we prepare a Bank Reconciliation Statement (BRS). A BRS is
prepared periodically to reconcile the two balances and explain the
reasons for the differences between them. BRS is just a statement.
• Rules Of Reconciliation: In BRS, the basic rule is Do As Other Book Has
Done. In the BRS , we revise the cash book balance in following manner.
(A) We start with cash book balance.
(B) We record the items recorded only in the pass book but not in the
cash book.
(C) We omit the items omitted by the pass book, and
(D) We thus arrive at the “revised” cash book balance, which now will be
equal to the pass book balance.
SPECIMEN
BANK RECONCILIATON STATEMENT AS ON ….
PARTICULARS AMT (₹)
CASH BOOK BALANCE ... …. … …. xxx
Record in cash book
Deposits shown only in cash book ... …. … …. (+)xxx
Payments shown only in cash book ... …. … …. (-)xxx
Omit from cash book
Deposits not shown in Pass book ... …. … …. (-)xxx
Payment not shown in Pass book ... …. … …. (+)xxx
REVISED CASH BOOK BALANCE=
BALANCE IN PASS BOOK ... …. … …. xxx
BANK RECONCILIATION STATEMENT AS ON……
PARTICULARS ₹ ₹
CASH BOOK BALANCE ... …. … …. xxx
Add:
Deposits shown only in cash book ... …. … …. (+)xxx
Payments shown only in cash book ... …. … …. (-)xxx
... …. … …. xxx
Less:
Deposits not shown in Pass book ... …. … …. xxx
Payment not shown in Pass book ... …. … …. xxx (-)xxx
BALANCE IN PASS BOOK xxx
TYPES OF BRS
A Bank Reconciliation Statement may be prepared:
A. When the items and errors causing the difference must be found out
comparing the two books for the certain period.
B. When the items causing the difference are given.
C. When the errors causing the difference are given.
4. BRS From Comparison of CB And PB
Illustration 1: From the following extracts from the cash-book and the pass book for the
month of January 2014, prepare the Bank Reconciliation Statement as on 31st January 2014
5. When Items Causing Difference Are Given
6. Different Starting Points
• We may , while preparing a BRS, start with either (1) the balance as per cash
book , or (2) the balance as per pass book, or (3) an overdraft as per cash
book, or (4) an overdraft as per pass book. We have already seen how BRS is
prepared starting with cash book balance. Let us see how a BRS is prepared in
all the other cases.
START WITH BALANCE AS PER PASS BOOK
START WITH OVERDRAFT AS PER CASH BOOK

START WITH OVERDRAFT AS PER PASS BOOK

7. Reconciliation Of Errors
ERRORS IN WRITING AND TOTALLING
Errors causing difference between the cash book and the pass book may be (a)error of
commission or omission in writing a book , or (b) errors in totalling (casting) a book .
Casting means taking the total of a column or a book . Overcasting means wrongly
taking a larger total; undercasting means wrongly taking a smaller total. An error of
writing or totalling may cause book to show either excess or less deposits or
payments.

RULE OF RECONCILIATION
In the BRS , we revise the cash book balance in the following manner:
1. Start with cash book balance
2. Omit the cash book errors not in the pass book.
3. Commit the errors made in the pass book.
4. Arrive at the “revised” cash book balance. Since we have omitted the cash book
errors and committee the pass book error , both books now show the same
balance , that is balance as per the pass book.
ERRORS IN CASH BOOK
1. Excess deposits in CB: Excess deposits in cash book may be due to recording a
deposit twice in the cash book ; recording a larger amount of deposit; recording a
payment as a deposit ; recording cash received in bank receipt column etc
2. Excess payment in CB : Excess payment in a cash book may be due to recording a
payment twice in cash book ; recording a wrong amount of payment ; recording a
deposit as a payment ; recording cash paid in bank receipt column etc
3. Lower deposits in CB : Lower deposits in cash book may be due to omitting to
record a cheque deposited; recording a smaller amount of deposit; recording a
deposit in payment column of cash book etc
4. Lower payment in CB : Lower payment in cash book may be due to omitting to
record a cheque issued ; recording a smaller amount of payment ; recording a
payment in deposit column of cash book etc
ERRORS IN PASS BOOK
1. Excess deposits in PB : Excess deposits in pass book may be due to recording
a deposit twice in the pass book ; recording a wrong amount of deposit in
the pass book ; recording a payment in the deposit column of pass book etc
2. Excess payment in PB : Excess payment in a pass book may be due to
recording a payment twice in pass book ; recording a wrong amount of
payment ; recording a deposit in payment column of pass book etc
3. Lower deposits in PB : Lower deposits in pass book may be due to omitting
to record a cheque collected ; recording a deposit in payment column of
pass book etc
4. Lower payment in PB : Lower payment in pass book may be due to omitting
to record a cheque paid; recording a payment in deposit column of pass
book etc