College Accounting (Book Only): A ...

12th Edition
Cathy J. Scott
ISBN: 9781305084087



College Accounting (Book Only): A ...

12th Edition
Cathy J. Scott
ISBN: 9781305084087
Textbook Problem

Why is there generally a difference between the balance in the Cash account on the company’s books and the balance on the bank statement?

To determine

Indicate the main reason for the difference between the cash balance in the Cash account of the company and the cash balance on the bank statement.


Bank statement: This is a periodic or monthly statement issued by bank reporting the account summary of transactions done by the account holder.

Reasons for the difference:

  • The deposits which are not recorded by the bank are referred to as deposits in transit. The deposits in transit are not reflected on the bank statement.
  • Outstanding checks are the checks that are issued by the company, but not yet paid by the bank. When the check is issued for payment, the company deducts the cash balance immediately. But the bank deducts only when the cash is paid for the issued check.
  • The receivables collected by bank, are credited to the customer’s bank account...

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