Unit-3 Cash Book And Bank Reconciliation

In this unit you will learn about the most important subsidiary book called Cash Book.

What is Bank Reconciliation Statement?

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Learning Pundits Content Team

Written on Apr 16, 2019 12:55:59 PM

  • We learnt that the firm records all transactions relating to its bank account in a Three Column Cash Book. All deposits into the bank are recorded on the debit side of the cash book and all withdrawals from the bank on the credit side. The bank also maintains the firm's account in its books. It credits customer's account with all deposits made by him and debits his account with all withdrawals made by him. The bank provides a copy of this account to the customer in the form of a bank statement or a pass book.

  • When the businessman receives the bank statement or the pass book from the bank, he compares it with the cash book. Normally, entries in the cash book would tally with those in the pass book and the balances shown by both the books should also be the same. But in practice, they generally differ. This happens if there are some entries which have been recorded in the cash book but they do not appear in the pass book. Similarly, there may be some entries which have been recorded in the pass book but they do not appear in the cash book. The difference can also arise on account of errors committed either by the film or by the bank in the recording of various transactions.

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