Bank Statement or Pass Book is a copy of the Ledger Account maintained by the Bank to record the transactions of its clients. Each customer is issued a separate Pass Book by his/her bank. The credit side of the Pass Book/ Bank Statement shows receipts of the clients, on the other hand, its debit side shows withdrawals or payments made by the clients.
A bank account is a Personal Account that follows the rule of “Debit the receiver; Credit the giver”. Thus, when money is deposited into the bank, Bank Account is debited as the bank is the receiver and the bank credits the customer’s account as the customer is the giver. That is why ‘the credit side of the Pass Book/ Bank Statement represents the receipts of customers’.
How Banking Transactions are recorded
Banking transactions are recorded in the following two ways:
Deposits transactions: The deposit of a cheque is recorded on the debit side Bank column of the Cash Book by the client, on the other hand, the bank increases its client’s account by recording the deposit on the credit side of the client’s account. Thus, all such receipts which are shown on the debit side of the Cash Book are credited to the client’s account in the Pass Book.
Withdrawals/Payments transactions: The withdrawal or payments through cheques are recorded by the client on the credit side Bank column of his/her Cash Book. On the other hand, the bank reduces the client’s account by recording the withdrawals on the debit side of the client’s account. Therefore, payments are recorded on the debit side of the Pass Book. Therefore, it can be concluded from the above discussion that all entries of Cash Book and Pass Book are more or less the same but debit entries of Cash Book are shown on the credit side of Pass Book and vice versa. At what time Transactions are recorded in the books (Cash Book and Pass Book).
The timing of recording transactions in the Cash Book and in the Pass Book need not be necessarily the same. This is because, in Cash Book, we record transactions at the time of their occurrence, whereas, in the Pass Book, transactions are recorded when the cheque is cleared by the bank. For example, a cheque issued to a supplier is recorded on the credit side of the Cash Book on the date when it is issued. However, in the Pass Book, this cheque is recorded on the debit side of the customer’s account on the date when the cheque is presented as well as cleared by the bank.
accounting information is often defined as data and facts produced or revealed by the financial statements of a business. This information is usually available within the sort of financial statements, financial reports, etc.