Tag: meaning of passbook and cashbook

Outstanding cheques or unpresented cheques are those cheques which have been issued by the company but not yet presented for payment by the other party. The amount of such cheques have already been deducted from the cash book by the company accountant. The bank , on the other hand, will credit the bank account only when such cheque has been cleared from the bank. So, while reconciling the balances as per cash book and pass book, the account of outstanding cheques is added to book adjusted balance of cash.

In case of outstanding cheques the entry for the same would have been entered in the cash book and so the bank statement would be lower than the cash book balance.

The reconciliation is as follows :

A Pass Book is a copy of customer's account issued by the bank. The bank maintains the customer accounts in its books of accounts which are further shown in the pass book. Thus passbook is a record of all the transactions that take place in a customers account.

In case of interest allowed by bank, the entry for the same would have been entered in the pass book due to which the pass book balance would be higher than the cash book balance.

In case of uncollected cheques  the entry for the same is already made in the cash book due to which the cash book balance becomes higher. 

A bank statement is a printed record of all the transactions that take place in a customer's account. The bank maintains customers account in its books of account and the same is presented to the customer in the form of a statement to the customer to check balances, additions and subtractions in the bank account .   

In case of direct payments by bank the entry for the same is already made in the pass book due to which the pass book balance becomes higher. So, when the balance as per pass book is the starting point, direct payments by bank are added in the bank reconciliation statement.

The reconciliation is as follows :