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1. The date of preparing bank reconciliation statement is very important. Suppose, we are preparing statement on 31st December, 2006. All those transactions which have been correctly entered in both the cash book and pass book by December 31, 2006 will not be entered in the statement, because the balance of both the books has increased or decreased simultaneously with the same amount.

 

2. Cheques worth $ 1,000 were issued during December, 2006, but cheques for $ 300 were not presented for payment.

Or

Cheques for $ 1,000 were issued during December, 2006 but out of these cheques for $ 300 were presented for payment on January 1 , 2007.

Or

Cheques for $ 1,000 were issued during December, 2006, but out of these cheques for $ 700 were  debited in the Pass Book by December 31, 2006.

 

All the above three sentences carry the same meaning. In all these cases, the balance of cash book has been reduced by $ 1,000 but the balance of pass book was reduced by $ 700 only. The balance of cash book will be lesser than the balance of pass book by $ 300, so $ 300 will added if we prepare statement with the balance of cash book and deducted if we prepare statement with the balance of pass book. This will be done to bring the balance of the book with which we are preparing statement to the level of the reverse book.

 

3. Cheques for $ 2,000 were deposited into the bank but out of these cheques for $ 700 were cleared by the date of preparing statement.

Or

Cheques for $ 2, 000 were deposited into the bank in the month of December, 2006 but out of these cheques for $ 1,300 were collected by the bank on January 1, 2007.

Or

Cheques for $ 2.000 were deposited into the bank but out of these cheques for $ 700 were collected by the Bank by 31st December, 2006.

Or

Cheques for $ 2,000 were deposited but out of these cheques for $  1,300 were not cleared at all.

 

All the above transactions carry the same meaning. The balance of cash book was increased by $ 2,000 at the time of depositing the cheques for $ 2,000, but cheques for $ 1,300 were not cleared or cleared on January 1st or cheques for $ 700 were cleared during the year means that the balance of pass book was increased by $ 700, the amount of cheques collected by the date of preparing statement i.e., 31st December, 2006. There will be difference in the balances of cash book and pass book of $ 1 ,300. The item will be deducted while preparing statement with the balance of cash book and added while preparing statement with the balance of pass book by $ l ,300.

 

4. Cheques issued or drawn or credited to the bank column of the cash book or credited in the cash book.

Or

Cheques presented for payment or the bank made the payment of cheque or the amount debited by the bank or the cheques debited in the pass book.

 

Both the above sentences carry the same meaning. The bank balance will reduce as per the consequence of both the sentence. The first sentence reduces balance as per cash book and the second sentence reduces balance as per pass book. Whenever we issue cheques we debit parties account that cheque has been given and credit bank. In case of withdrawal also bank is credited. Crediting bank account in our books of accounts means reducing our bank balance as per cash book.

 

In the same way, the bank debits customers accounts in case of making payment to the customer or any other party on behalf of the customer. Debiting customer’s account by the bank means payment from the bank account of the customer, so it will reduce bank balance as per pass book. We can now sum up, “Whatever is debited in the cash book is credited by the bank in customers ledger account or pass book if everything goes well”.

 

5. Cheques deposited into the bank or paid into the bank or debited in the bank column of cash book or debited in the cash book.

Or

Cheques cleared by the bank or collected or credited in the customer’s ledger or credited in the pass

 

Both the above sentences have the same meaning. Cheques received from outside parties are deposited into the bank. While depositing cheques we debit bank account because the bank is a receiver or cash at bank as an asset increases. Debiting bank account in the cash book means increasing bank balance as per cash book. The bank after collecting the amount of the cheques wilts credit customer’s account in the ledger and credit the amount in customers pass book. It will increase customer’s bank balance as per pass book. If everything is O.K. whatever is debited in cash book is credited in the pass book.

 

6. Debiting bank account in the cash book means an increase of the bank balance and crediting bank account in the cash book means decrease in the bank balance as per cash book.

 

7. Debiting customers account in the ledger maintained by the bank or in the pass book means decrease in the bank balance as per pass book, crediting customer’s accounts by the bank means an increase in the bank balance as per pass book.

 

8. These days, the banks have started sending statement of accounts to their current accounts holders either daily or weekly or monthly, depending upon the number of transactions instead of issuing pass book.

 

The two terms pass book or statement of account issued by the bank are the same? The term ‘pass book’ has been in use traditionally. It may be substituted by the term statement of account.