Accounting · Bank Reconciliation Statement

Cash Book vs Pass Book (Bank Reconciliation Statement)

Updated 1 October 2026 · Fact-checked

The cash book is your record of bank transactions. The pass book is the bank's record of your account. They are mirror images: a debit in one is a credit in the other. A favourable balance is a debit in the cash book but a credit in the pass book. Overdraft reverses this.

Understand Cash Book vs Pass Book

Every business that has a bank account keeps two records of the same account. The cash book (bank column) is kept by you. The pass book (bank statement) is kept by the bank.

The key idea is that the two books look at the same money from opposite sides. In your books, the bank is an asset. When you deposit money, the bank balance rises, so you debit the bank column. In the bank's books, your account is a liability, because the bank owes you that money. When you deposit, the bank's liability rises, so the bank credits your account.

That is why the entries are mirror images:

Deposit or amount received: debit in cash book, credit in pass book.
Withdrawal or payment made: credit in cash book, debit in pass book.

Now the balances. If you have money in the bank, it is a favourable balance. It shows as a debit balance in the cash book and a credit balance in the pass book. If you have overdrawn, it is an overdraft. It shows as a credit balance in the cash book and a debit balance in the pass book.

In theory both books should show the same figure. In practice they differ because of timing gaps (cheques not yet presented or cleared) and items one party records before the other (bank charges, interest, direct deposits). A bank reconciliation statement explains the gap. This topic is the base for all of that, so get the debit and credit directions fixed in your mind first.

Key rules to remember

Deposit or receipt: Cash book: Dr (receipts side) | Pass book: Cr; Money coming into the account. The bank credits it because it owes you more.
Withdrawal or payment: Cash book: Cr (payments side) | Pass book: Dr; Money going out of the account. The bank debits it because it owes you less.
Favourable balance: Cash book: Debit balance | Pass book: Credit balance; Positive bank balance. Shown as 'Balance b/d' on the receipts side of your cash book.
Overdraft balance: Cash book: Credit balance | Pass book: Debit balance; Bank has lent you money. Shown on the payments side of your cash book.
Mirror rule: Debit in one book = Credit in the other for the same transaction; Use this to flip any item when converting between the two books.

How to solve Cash Book vs Pass Book questions

Use this method for any question that asks you to identify, compare or interpret entries and balances in the cash book and pass book.

1Identify whose book you are reading: the cash book (yours) or the pass book (the bank's).
2Read the balance and its side. Debit or credit in the cash book? Debit or credit in the pass book?
3Convert to meaning using the mirror rule. Cash book debit = favourable. Pass book credit = favourable. The opposites mean overdraft.
4For each transaction, decide if money came in or went out of the account.
5Place it correctly: in your cash book, receipts go on the debit side and payments on the credit side. In the pass book, receipts are credits and payments are debits.
6If the question gives one book and asks for the other, flip every entry and every balance side.
7State your conclusion in a line, for example 'Balance as per pass book is an overdraft of ₹X'.

Quickest way: The flip test

When to use it: Use when a question gives a balance or entry in one book and asks what it looks like in the other, or whether it is favourable or overdrawn.

Write 'Cash book Dr = Pass book Cr' at the top of your answer sheet or rough work.
Look at the given side. Dr in cash book means favourable. Cr in pass book means favourable.
If the sides are Cr in cash book or Dr in pass book, write 'overdraft'.
To switch books, flip the side but keep the amount the same.
Check the sense: a deposit should raise a favourable balance, a withdrawal should lower it.

Common mistakes in Cash Book vs Pass Book

Saying a favourable pass book balance is a debit balance.
Students think from their own books, where bank is an asset and debit means money in hand.
Fix: In the pass book, think like the bank. It owes you money, so a favourable balance is a credit.
Treating a debit balance in the pass book as money in the bank.
Mixing up the two books and applying cash book logic.
Fix: A debit balance in the pass book means you owe the bank, so it is an overdraft.
Writing a deposit on the credit side of the cash book.
Students copy the bank's credit entry into their own book.
Fix: Your bank column follows normal asset rules: receipts on the debit side, payments on the credit side.
Assuming the two books must always show the same balance.
They are called mirror images, so students expect an exact match.
Fix: They mirror in direction, but timing gaps and unrecorded items create differences. That is why a BRS is prepared.
Treating an overdraft in the cash book as a debit balance.
Students see 'balance' and automatically put it on the debit side.
Fix: An overdraft is a credit balance in the cash book. Write it on the payments side as 'Balance c/d' or 'Overdraft'.

Worked examples

Example 1

On 31 March, the bank column of Mr. Rao's cash book shows a debit balance of ₹48,000. What does this mean, and how will the same balance appear in the pass book if there are no differences?

Show the solution

The cash book is Mr. Rao's own record, and the bank is an asset for him.
A debit balance in the cash book means he has money in the bank, so it is a favourable balance.
By the mirror rule, a debit in the cash book is a credit in the pass book.
With no differences, the pass book will show the same amount on the opposite side.

Answer: The balance is favourable (₹48,000 in hand at the bank). The pass book will show a credit balance of ₹48,000.

Example 2

Ms. Iyer's pass book shows a debit balance of ₹15,000 on 31 March. Explain what this means and state how it appears in her cash book, assuming no differences. Also state how a cheque of ₹6,000 deposited by her is recorded in each book.

Show the solution

A debit balance in the pass book means the customer owes the bank. So it is an overdraft of ₹15,000.
By the mirror rule, a debit in the pass book is a credit in the cash book.
So the cash book shows a credit balance of ₹15,000, on the payments side.
The deposit of ₹6,000 is money coming into the account.
In the cash book it is debited, on the receipts side of the bank column.
In the pass book the bank credits her account with ₹6,000.

Answer: Overdraft of ₹15,000: debit balance in the pass book, credit balance in the cash book. The ₹6,000 deposit is a debit in the cash book and a credit in the pass book.

Exam tips

Write 'Cash book Dr = Pass book Cr' first. It takes five seconds and prevents most errors in later BRS questions.
Always label the balance as 'favourable' or 'overdraft' in your answer. Examiners look for the meaning, not just the side.
In a theory or short-answer question, give one line of reasoning: the bank is your asset, but you are the bank's liability.
If a BRS question gives an overdraft, flip the signs of your adjustments. Check the starting balance type before you begin.
Present the answer neatly with the book name beside each Dr or Cr. Clear presentation earns step marks.

Practice questions from Bank Reconciliation Statement

Cash Book vs Pass Book: frequently asked questions

What is the main difference between a cash book and a pass book?

The cash book is kept by the business and records its bank transactions. The pass book is kept by the bank and records the same account from the bank's side. Their entries are opposite: a debit in one is a credit in the other.

Why is a favourable balance a credit in the pass book?

The bank treats your deposit as money it owes you, which is a liability for the bank. Liabilities are shown as credits. So when you have money in the bank, the bank shows it as a credit balance.

What does a debit balance in the pass book mean?

It means you have overdrawn your account and owe money to the bank. It is called an overdraft. In your cash book the same position is a credit balance.

Should the cash book and pass book balances always match?

No. Timing differences, such as cheques issued but not yet presented, and items the bank records before you do, such as bank charges, cause differences. A bank reconciliation statement explains and reconciles them.