Answer to Question #76723 in Accounting for Brodie
1) Check issued by the firm not yet presented to the bank: When a firm issues check, they are entered in the credit side of the bank column in the cash book. But the person who receives the check might not present it to the bank until sometime later. Hence the bank will debit the firm’s account only after the check is presented. There is a time-lapse between the issue of check and the presentation to the bank which might cause difference in the balance in both the books.
2) Check deposited in the bank but yet to be collected: The firm enters the check deposited in the bank in the debit side of the bank column in the cash book. But the banks will credit the check in the firm’s account only after the check amount is realized. This again might cause difference in the balance in both the books.
3) Direct deposits to the bank account: Sometimes money might be deposited in the firm’s bank account directly which transaction, the firm will be aware of only when they receive the bank statement. Hence the balance in the cash book will be lesser than the balance in the pass-book.
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