Is Passbook a Mirror Image of Cash Book, what is the difference?

No, a passbook is not a mirror image of a cash book. Though passbooks and cash books provide related financial information, they are not mirror images of each other.

 As the name says, cash transactions related to cash received or payments made by an organization are only recorded in a Cash Book. This could include money that is received, paid out, and even deposited into or withdrawn from a bank account.  A passbook on the other hand is a small book that a bank provides to its customers to record their deposits, withdrawals, and other transactions.

Purpose

A cash book is used by a business to record cash transactions, while a passbook is used by a bank customer mostly individuals to record their bank transactions.

 Maintenance

The cashbook is maintained by business enterprises to record cash transactions, while the passbook is issued by banks to their customers to review financial transactions routed through the bank. 

Frequency

A cash book is updated by the organisaions regularly to monitor their day-to-day financial transactions, while a passbook is updated periodically according to the convenience of the individual customers.

Content

A cash book includes all cash transactions, including money received, paid out, and even deposited into or withdrawn from a bank account, while a passbook contains transactions routed through the bank. 

Differences

The balances shown by a cash book and a passbook may not agree due to errors in recording transactions, direct debits or payments made by the bank, or interest and dividends collected by the bank. Passbook updates are done by the bank and may not necessarily occur as and when transactions take place. Cash book updates are typically done by the company as transactions occur. The cash book includes all cash and bank transactions, not just those involving the bank. The passbook only includes transactions processed by the bank. Differences between the passbook and the cash book can arise due to factors such as outstanding collection cheques, some issued by the company to parties but not presented to the bank for payment at the time of reconciliation, bank charges, and interest earned. These differences need to be reconciled to arrive at the correct cash balance.

Related Posts: