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The bank balance on the passbook does not equal the bank balance in the cash book for the same date.
Decide the direction of the gap, then check the usual items for that direction: unpresented cheques and unbooked credits when the passbook is higher; uncredited deposits and unbooked charges or debits when it is lower; then look for errors.
The cash book and the bank statement for the same period, a list of cheques issued and deposited, and the bank's schedule of charges.
Every rupee of the difference is explained as a timing item, an entry to pass in the books or an error to correct, and a BRS records the result.
Your bank balance and your cash book differ for three reasons: timing (cheques you wrote that have not been presented, or deposits not yet credited), items the bank has recorded that you have not (charges, interest, direct debits and credits), and mistakes on either side. A bank reconciliation statement, or BRS, lists each item until the two balances agree.
The passbook is the bank’s record of your account (today, usually the downloaded statement). The cash book is your own record, whether in Tally, Zoho Books or Excel.
Which direction is the gap, and what does that narrow down?
The direction tells you where to look first.
| Passbook compared with cash book | Usual items | Two-minute check | Fix |
|---|---|---|---|
| Passbook higher | Cheques issued but not presented | List cheques issued in the last two weeks | Timing item in the BRS, no entry |
| Passbook higher | Customer UPI, NEFT or IMPS credits not booked | Scan credits in the statement against receipts | Enter the receipts |
| Passbook higher | Interest credited by the bank | Look for “INT” in credits | Enter interest income |
| Passbook lower | Cheques deposited but not yet credited | List cheques deposited near the date | Timing item in the BRS, no entry |
| Passbook lower | Bank charges plus 18 percent GST | Look for “CHGS” lines | Enter charges and GST input |
| Passbook lower | EMIs, insurance or other auto-debits | Look for NACH, ACH or AutoPay lines | Enter the payment |
If none of these explains it, the gap is likely an error, covered below.
Worked example
On 31 March your cash book shows ₹2,35,000. The passbook shows ₹2,82,300. The passbook is higher by ₹47,300.
Passbook higher points to cheques issued but not presented, or credits you have not booked. You check cheques issued in the last two weeks of March. Cheque 004517 to a vendor for ₹47,300 was handed over on 28 March and has not yet been presented.
That one item explains the full gap:
| Amount | |
|---|---|
| Balance as per cash book | ₹2,35,000 |
| Add: cheque issued but not presented | ₹47,300 |
| Balance as per passbook | ₹2,82,300 |
No entry is needed. When the vendor presents the cheque in April, the passbook will fall by ₹47,300 and the two will agree.
When is the gap a mistake rather than timing?
If nothing in the table explains the gap, look for errors: an amount typed wrongly, an entry made twice, a payment posted to the wrong bank or a receipt missed. A gap that is divisible by 9 often means two digits were swapped, for example ₹4,520 typed as ₹4,250 (a difference of ₹270).
Also be sure you are comparing the right two numbers. A mismatch between the cash flow statement in your annual accounts and the bank balance is a different problem; see why your cash flow statement does not match your bank balance.
How do you check it quickly?
- Confirm both balances are for the same date and the same account.
- Work out the difference and its direction.
- Run the checks in the table for that direction.
- Enter anything the bank recorded that you have not.
- List the remaining timing items in a BRS.
- If a gap is still left, hunt for errors.
What mistakes should you avoid?
- Comparing balances on different dates, such as the cash book on 31 March and a statement downloaded on 3 April.
- Passing an entry for a cheque that has simply not been presented. Timing items need no entry.
- Forcing the difference into a sundry or suspense line without explaining it.
- Reconciling only once a year. A monthly BRS keeps the list of items short and easy to explain.
What to read next
If a difference remains after these checks, read my bank reconciliation does not tally: how do I narrow down the difference?. To prepare the statement properly, see the BRS guide, and for a monthly routine, the Days 1 to 5 runbook.
When transaction volumes grow, TransactIG matches bank statement lines to the books, flags the rest in an exception queue and gives audit-ready exports; see bank reconciliation software for India.