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The cash book bank balance and the passbook balance show different figures on the same date, and the learner does not know which is right.
Recognise that the two are records of one account made by two different parties at different times; list the items each side has that the other does not.
Common gap items: cheques issued but not presented, deposits not yet credited, bank charges and interest not yet booked, direct credits and debits.
A bank reconciliation statement that starts from one balance, adjusts for each listed item and arrives at the other balance.
The cash book (or its bank column) is your own record of every rupee moving through your bank account. The passbook, or bank statement, is the bank’s record of the same account. Because each side records entries at different times and from different documents, the two balances rarely agree on any given date. A bank reconciliation statement (BRS) explains the gap.
Who writes each record, and when does an entry appear in it?
The quickest way to see the difference is side by side.
| Point | Cash book (bank column) | Passbook / bank statement |
|---|---|---|
| Who writes it | You or your accountant | The bank |
| Source document | Your vouchers: cheque counterfoils, pay-in slips, invoices | The bank’s own processing: clearing, transfers, charges |
| When an entry appears | When you issue a cheque or deposit money | When the bank actually pays or credits it |
| Deposit sits on | Debit side (money in is your asset growing) | Credit side (money the bank owes you) |
| Payment sits on | Credit side | Debit side |
| Closing balance means | What you believe is in the bank | What the bank says is in the account |
The two timings are the root of every difference. You record a cheque when you hand it over. The bank records it only when the payee deposits it and it clears. The bank records its charges and interest when it applies them. You learn about them only when you read the statement.
Is a passbook the same as a bank statement, e-statement or bank book?
These four terms get mixed up, so here is how they are used in India.
- Passbook: the printed booklet many savings and current account holders get updated at the branch or a passbook printing kiosk. It is the bank’s record.
- Bank statement: the bank’s record for a period, printed or downloaded. Same entries as the passbook.
- E-statement: the PDF (or Excel/CSV download) of the bank statement sent by email or available in net banking.
- Bank book: your own record of the bank account. In Tally it is the bank ledger under the Bank Accounts group. In a columnar cash book it is the bank column.
So, for reconciling, passbook, bank statement and e-statement are the bank’s side. The bank book or cash book is your side.
A worked example: explaining a ₹23,300 gap
On 31 March, a small trading firm’s cash book shows a bank balance of ₹4,72,500. The passbook shows ₹4,95,800. The gap is ₹23,300.
Ticking the two records finds three items:
| Item | Amount (₹) | Effect on passbook compared with cash book |
|---|---|---|
| Cheque issued to a supplier on 29 March, not yet presented | 30,000 | Passbook higher (bank has not paid it yet) |
| Cash deposited on 31 March after cut-off, not yet credited | 8,000 | Passbook lower (bank has not credited it yet) |
| Interest credited by the bank, not in the cash book | 1,300 | Passbook higher (you have not recorded it yet) |
Starting from the cash book:
- Cash book balance: ₹4,72,500
- Add the cheque not yet presented: ₹4,72,500 + ₹30,000 = ₹5,02,500
- Deduct the deposit not yet credited: ₹5,02,500 − ₹8,000 = ₹4,94,500
- Add interest credited by the bank: ₹4,94,500 + ₹1,300 = ₹4,95,800
The result equals the passbook balance. Net effect: ₹30,000 − ₹8,000 + ₹1,300 = ₹23,300, which is the gap.
Only one of these items needs an entry in your books: the ₹1,300 interest. The cheque and the deposit are timing items. They will appear in the April statement without any action from you.
Why does this matter beyond exams?
The cash book is what goes into your profit and loss account, your balance sheet and your GST and TDS working. If it misses a bank charge, an interest credit or a customer’s direct transfer, your accounts are wrong. Comparing it with the passbook every month is the simplest control a business has.
What to read next
- Next in this series: What is an outstanding (unpresented) cheque in a bank reconciliation?
- Go deeper: Bank reconciliation statement (BRS) in India: format and preparation
- Background: What is bank reconciliation?
- For teams: Bank reconciliation software for India
For businesses with many accounts or long statements, TransactIG matches bank statement lines to the books and puts the unmatched items in an exception queue for review.