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Question

__________ is the reason for bank pass book showing less balance than Cash book.

A
Cheque issued but not paid
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B
Payment directly received by the bank
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C
Direct payment or interest charged by bank
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D
Interest given by Bank
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Solution

The correct option is C Direct payment or interest charged by bank
There are various reasons for bank pass book showing less than cash book.
  • Direct payments made by bank on behalf of the customers: Sometimes the customers give standing instructions to the bank to make some payment regularly on stated days to the third parties. For example, telephone bills, insurance premium, rent, taxes, etc. are directly paid by the bank on behalf of the customer and debited to the account.
  • Also interest on loans or overdraft will be debited by the bank directly which is not recorded in the cash book.As a result, the balance as per the bank passbook would be less than the one shown in the cash book.

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