Question

Outline five (5) reasons for the discrepancy between the cash book and the bank statement.

Answer 1

Cash book is maintained by the bank account holder (or cashier), and bank statement is maintained by the bank authority. Since two separate persons are involved in this act, there may be discrepancy in records.

Reasons are as below:

No.1) bank charges debited in the bank statement but not recorded in the cash book, because the cashier did not know the fact.

No.2) bank interest credited in the bank statement in a particular period but it is not known to the cashier, causing discrepancy.

No.3) check deposited in the bank and the cashier makes the necessary entry in cash book, but the check is not cleared till date, therefore, not recorded in the bank statement, causing discrepancy.

No.4) check issued to a supplier and recorded in the cash immediately; but, the same check is not presented to the bank by that supplier yet; it doesn’t make any entry in the bank statement till date although there is an entry in the cash book, causing discrepancy.

No.5) check deposited but returned dishonored – it makes no entry in bank statement although there is an entry of deposit in cash book, causing discrepancy.