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.

• A. omission in cash book
• B. omission in pass book
• C. wrong posting in cash/ pass book
• D. all the three

Answer 1

Answer: (D)

all the three

It is generally experienced that when a comparison is made between the bank balance as shown in the firm's cash book, the two balances do not tally. Hence, we have to first ascertain the causes of difference thereof and the reflect them in a statement called Bank Reconciliation Statement to reconcile (tally) the two balance. Reconciliation of cash book and the bank passbook balances amounts to an explanation of differences between them. The differences between the cash book and bank passbook is caused by:

a. timing differences on recording of the transactions.

b. errors made by the business or by the bank.

Sometimes the difference between the two balances may be accounted for by an error on the part of the bank or an error in the cash book of the business. This causes the difference between the bank balance shown by the cash book and the balance shown by the bank statement. Difference in balance as per pass book and balance as per cash book due to omission in cash book, omission in pass book and wrong posting in cash/[pass book are termed as difference arsing due to errors in recording the transaction.