Bank Reconciliation Statement

Cash book shows lesser balance than pass book

A cheque issued is immediately entered in the cash book, but the bank does not debit the account until the cheque is presented. So cash book shows a lesser balance than pass book.

Bank charges

Bank charges are deducted by the bank first, so the pass book balance becomes lower before the customer records the charge. During that time, the cash book balance is higher than the pass book balance.

Direct deposit by debtors into bank

When debtors deposit money directly into the bank, the bank credits the account immediately, but the customer records it later. So the pass book shows a higher balance than the cash book.

Debit balance

A debit balance in the cash book shows favourable balance. It means the business has money in the bank.