From Pass Book to Cash Book

  • A bank reconciliation statement can be prepared starting with the cash book balance or pass book balance.
  • Debit balance as per cash book and credit balance as per pass book means favourable balance.
  • Credit balance as per cash book and debit balance as per pass book means unfavourable balance.
  • When Bank Reconciliation Statement starts with positive pass book balance, each transaction is thoroughly analysed.
  • Transactions that increase cash book balance (Cheques deposited but not yet collected by the bank) or decrease pass book balance (Direct payments by bank on behalf of the customer and cheques deposited dishonoured) are added.
  • Transactions that decrease cash book balance (Cheques issued but not presented for payment) or increase pass book balance (Direct collections on behalf of the customers and direct deposit by a customer) are deducted.
  • Finally, we reach at balance as per cash book.
  • When Bank Reconciliation Statement starts with negative pass book balance i.e. debit balance as per pass book: Treat the overdraft as negative figure in Bank Reconciliation Statement.
  • Then same treatment is to be done as in case when pass book starts with a positive balance.
  • Corrected cash book is prepared to record unrecorded entries that have been debited and credited by the bank and passing rectifying entries in the cash book.

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