1.

Reasons of difference between cash book & pass book balance:

Cheque issued but not presented for payment: When cheque are issued then
immediately make entry in the cash book. The cheque issued can be presented
for payment to the bank within six month from the date of cheque as per banking
law. The cheque are presented for payment after the expiry of the above period
then payment is refused by the bank. This cheque is also known as stale
cheque. It is possible at the time when the balance of the two books are being
compared, thus more chances of causing a disagreement b/w the two balances.
Cheque paid into the bank but not yet cleared: As soon as the cheque are
deposited into the bank, the immediately entry is passed in the cash book. This
will make entry in pass book only when cheque are cleared. It is possible at the
time when the balance of the two books are being compared, thus more chances
of causing a disagreement b/w the two balances.
Interest allowed by the bank: Bank might have credited the account of the
customer with the interest and may have made the entry in the pass book. It is
possible that the entry of such interest may not have been made by the customer
in the cash book, thus causing a disagreement b/w the two balances.
Interest and Bank charges debited by bank: Sometime bank charges interest
from the customer then immediately entry in the pass book but not in cash book.
So, in this case when check the balance b/w cash and bank book then
disagreement b/w the two balances. So, it is the main reason to create difference
b/w two books.
Interest, dividend collected by the bank: sometime interest on government
security or dividend on share is collected by the bank and is credited to customer
account. If the entry does not appear in the cash book then balance will differ.
Direct payment by bank: Sometimes, understanding instruction from the clients
certain payment like insurance premium, club fees instalment etc. are made by
the bank. Then this entry is recorded only in the pass book. This entry is made in
the cash book only when the necessary intimation to that effect is received from
the bank by the client. The entries in the cash and pass book may be on different
dates.
Direct payment into the bank by a customer: Sometimes, our customer deposit
money direct into the account in the bank. It is only recorded in the pass book
not in the cash book. It is possible at the time when the balance of the two books
are being compared, thus more chances of causing a disagreement b/w the two
balances.
Dishonor of bill discounted with the bank: Sometimes, customer get their bills
discounted with the bank. If the bank is not able to get payment of these bills on
the due date. It will debit the customer account with the amount of the bills
together with the nothing charges if any. The customer will pass the entry in the

cash book only. When balance of the two books is being compared, thus more
chances of causing a disagreement b/w the two balances.
Dishonor of cheque: When the received cheques are deposited into bank, these
are immediately recorded in the cash book. As a result cash book balance is
increased. But the deposited cheque is dishonored due to lack of funds or due to
other reasons. Bank does not credit the amount of the depositor. As a result
disagreement b/w the two balances.
Error and omissions: If any error is committed either by the bank or by a
customer in the cash book while recording a transaction in their respective books,
it causing a disagreement b/w the two balances. The error may be:
Under cast/overcast of receipt side or payment side.
Bank charges omitted from the banks or recorded twice in the books.
Wrong carry forward of cash book balance.