Question

Difference in balance as per pass book and balance as per cash book due to _____________ is termed as difference arising due to errors in recording the transaction and not a timing difference.

• A. cheque issued but not presented for payment
• B. dishonour of a discounted bill
• C. direct payment by the bank/ customers
• D. omission in cash book

Answer 1

Answer: (D)

omission in cash book

Many times the balance as per the bank pass book and the balance as per the cash book do not match. The differences between the cash book and the bank passbook is caused by:

a. timing differences on recording of the transaction: When a business compare the balances of its cash book with the balance shown by the bank passbook, there is often a difference, which is caused by the time gap in recording the transactions relating either to payments or receipts. The factors affecting time gap includes cheques issued by the bank but bot presented for payment, cheques paid into the bank but not yet collected, direct debits made by the bank on behalf of the customer, amounts directly deposited in the bank account etc.

b. errors made by the business or by the bank: These are the errors which are not caused on account of any timing difference. Overcasting,under casting of bank passbook or omission in cash book is not a factor termed as timing difference.