EP_14 - LESSON 14 CASH BOOK PASS BOOK BANK RECONCILIATION STATEMENT Dr Jyotsna Sethi Rekha Rani STRUCTURE 14.1 Introduction 14.2 Objectives 14.3

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211 LESSON 14: CASH BOOK, PASS BOOK, BANK RECONCILIATION STATEMENT Dr. Jyotsna Sethi, Rekha Rani STRUCTURE 14.1 Introduction 14.2 Objectives 14.3 Cash Book 14.4 Types of Cash Book 14.4.1 Simple Cash Book 14.4.2 Two Column Cash Book 14.4.3 Three Column Cash Book 14.5 Petty Cash Book. 14.5.1. Imprest System of Petty Cash Book. 14.5.2 Advantages of Petty Cash Book 14.6 Pass Book 14.7. Bank Reconciliation Statement 14.7.1 Meaning 14.7.2. Causes for difference between Cash Book Balance and Pass Book Balance. 14.7.3. Need and importance of Bank Reconciliation Statement 14.7.4 Procedure for preparation of Bank Reconciliation Statement. 14.8. Summary 14.9. Glossary 14.10. Self Assessment Questions 14.11. Answer to check your progress 14.12. Further Readings 14.1. INTRODUCTION Every entrepreneur should have knowledge of cash book and pass book as from these books, he may check how much balance is available to him for meeting his expenses and liabilities and what are the details of receipts and payments of a particular period. With the details of payments it can be checked that whether the payments are of reasonable amount or not. If the expanses are unreasonably high he may take steps to control them. An
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211 entrepreneur who regularly checks his cash and bank balances would never face problems like dishonor of cheques or cash crisis etc. Entrepreneur, who doesn’t distinguish between his revenue and profits, may spend all his receipts for his personal purposes subsequently resulting in deficiency of cash for business purposes and lead to cash crisis. 14.2. OBJECTIVES After going through this lesson you should be able to s Explain the meaning of Cash Book, Pass Book, and Petty Cash Book. s Discuss the types of cash book. s Enter the transactions in Cash Book. s Explain the meaning, need and importance of bank reconciliation statement. s Discuss the causes for difference between the balances of Pass Book and Cash Book. s Prepare bank reconciliation statement. 14.3 CASH BOOK In business most of the transactions relate to receipt of cash, payments of cash, sale of goods and purchase of goods. So it is convenient to have separate books for each such class of transaction, one for receipts and payments of cash, one for purchase of goods and one for sale of goods. These books are called subsidiary books. Cash book is a subsidiary book which records the receipts and payment of cash. With the help of cash book cash and bank balance can be checked at my point of time. (Ref.: T.S. Grewal, “ Double Entry Book Keeping ”) 14.4. TYPES OF CASH BOOK Cash book can be of four types: 1. Simple Cash Book. 2. Two column cash book. 3. Three column cash book. 4. Petty cash book 14.4.1 SIMPLE CASH BOOK A simple cash book is prepared like any ordinary account. The receipts are recorded in the Dr Side and the payments are recorded in the Cr side of the cash book. The specimen Performa of a simple cash book is given as follows:
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212 Simple Cash Book Dr. Receipts Payments Cr. Date
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This note was uploaded on 03/27/2012 for the course UYFUY ILUBGIU taught by Professor Jhbvh during the Spring '12 term at Stratford.

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EP_14 - LESSON 14 CASH BOOK PASS BOOK BANK RECONCILIATION STATEMENT Dr Jyotsna Sethi Rekha Rani STRUCTURE 14.1 Introduction 14.2 Objectives 14.3

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