Question

Fill in the Blank Question

Differences between the bank balance and the company balance typically arise due

to and

differences.

Answer 1

Reasons of difference between bank balance and company balance of cash:

1. Difference due to timing- There is always a time gap between recording a transaction in the books of accounts and it being recorded by the bank. For example, a check issued is recorded in the books of accounts immediately but the bank will record it when it is presented for payment.

2. Transaction recorded by bank- Sometimes transactions are recorded by the bnak which are not known to the account holder. For example, Interest charged or allowed, bank charges, interest received on deposits.

3. Errors- Errors may be committed by the bank or the account holder and these errors lead to difference in the balances of cash book and bank statement. For example, wrong balance may be carried forward, non recording of a transaction.