Here are some of the causes for passbook and cashbook being different in detail:
- Timing differences: The passbook records transactions as they are processed by the bank, while the cash book records transactions as they occur. This means that there may be a lag between the time a transaction is recorded in the passbook and the time it is recorded in the cash book. For example, if you deposit a check into your account on Monday, the bank may not process the deposit until Tuesday. This means that the deposit will not be reflected in your passbook until Tuesday.
- Errors: Both the passbook and the cash book are susceptible to errors. These errors can be made by the bank, by the business, or by both. For example, the bank may mistakenly record a deposit as a withdrawal. Or, you may mistakenly record a check as a deposit.
- Transactions not recorded: There may be transactions that are not recorded in either the passbook or the cash book. This can happen if the transaction is not processed by the bank, or if the business does not record the transaction in their cash book. For example, if you pay a bill in cash, the transaction may not be recorded by the bank. Or, if you write a check to yourself, you may not record the transaction in your cash book.
- Bank charges and interest: The passbook will show bank charges and interest that have been applied to your account. However, the cash book may not show these charges and interest until they are received by the business.
- Direct debits and credits: Some businesses allow their customers to set up direct debits or credits from their bank accounts. These transactions will be recorded in the passbook, but they may not be recorded in the cash book until the business receives a statement from the bank.
If you notice that your passbook and cashbook are different, you should investigate the reasons for the difference. Once you have identified the reasons for the difference, you can make the necessary adjustments to your cash book to ensure that it is accurate.
Here are some tips for reconciling your passbook and cashbook:
- Start with the balance on the passbook.
- Add any deposits that have not yet been recorded in the cash book.
- Subtract any withdrawals that have not yet been recorded in the cash book.
- Add any interest that has not yet been recorded in the cash book.
- Subtract any charges that have not yet been recorded in the cash book.
- Compare the adjusted balance on the passbook with the balance in the cash book.
- If the two balances are different, identify the reasons for the difference and make the necessary adjustments to the cash book.