Transactions that Usually Appear in the Pass Book, but not in the Cash Book

There are many transactions which are initially recorded by the bank in its ledger. The firm records them in the cash book only when it receives the intimation from the bank or when it notices them while going through the pass book. Thus, it is Bank Reconciliation Statement possible when the pass book and the cash book are compared upto a particular date, there may be some entries which appear in the pass book but not in the cash book. Such transactions have been discussed below.

a)Interest allowed by the bank if any: The banks normally do not allow any interest on the current account balances. Some banks may however allow nominal interest. When interest is allowed, the bank credits it to the customer's account. This increases the balance in the pass book. The firm would pass the corresponding entry in the cash book only when it receives the intimation from the bank or notices it in the pass book. Hence, the cash book balance will be lower till such entry is made.

b)Amounts collected by the bank a s per the standing instructions: The businessman often issues standing instructions authorizing his banker to collect on his behalf certain amounts due to him, such as interest, dividends, etc. The bank credits the customer's account as and when it collects such amounts and sends the necessary intimation to him. The firm will pass the corresponding entry in the cash book when it receives such intimation. Sometimes the intimation may be misplaced and no entry is passed in cash book. Thus, as on the date of reconciliation, the balances as per the cash book will be lower than the balance as per the pass book.