and wrong totalling, etc. committed by the bank while posting entries in the passbook also cause differences between passbook and cash book balance. Test Your Understanding - I I. Read the following transactions and identify the cause of difference on the basis of time gap or errors made by business firm/bank.
Put a sign ( ü ) for the correct cause. S.No. Transactions Time Gap Errors made by business/ bank Cheques issued to customers but not presented for payment. Cheque amounting to Rs.
, issued to M/s. XYZ but recorded as Rs. in the cash book. Interest credited by the bank but yet not recorded in the cash book.
Cheque deposited into the bank but not yet collected by the bank. Bank charges debited to firm’s current account by the bank. II. Fill in the blanks : (i) Passbook is a copy of.............as it appears in the ledger of the bank.
(ii) When money is with drawn from the bank, the bank ............. the account of the customer. (iii) Normally, the cash book shows a debit balance, passbook shows .............balance. (iv) Favourable balance as per the cash book means .............balance in the bank column of the cash book.
(v) If the cash book balance is taken as starting point the items which make the cash book balance smaller than the passbook must be .............for the purpose of reconciliation. (vi) If the passbook shows a favourable balance and if it is taken as the starting point for the purpose of bank reconciliation statement then cheques issued but not presented for payment should be .............to find out cash balance. (vii) When the cheques are not presented for payment, favourable balance as per the cash book is .............than that of the passbook. (viii) When a banker collects the bills and credits the account passbook overdraft shows .............balance.
(ix) If the overdraft as per the passbook is taken as the starting point, the cheques issued but not presented are to be .............in the bank reconciliation statement. (x) When the passbook balance is taken as the starting point items which makes the passbook balance .............than the balance in the cash book must be deducted for the purpose of reconciliation.