There are several reasons that contribute for the disagreement of the balance as shown by cash book and passbook. 

They are as under:

1. Cheques issued but not presented for payment:

When the trader issues a cheque, he credits its amount immediately in his cash book. The same will be entered in the passbook only on presenting the cheque and making payment by the bank. If the cheque is not presented for payment before the date of preparation of bank reconciliation statement, the balance as per Pass Book will be more than the balance as per Cash Book.

2. Cheque paid in for collection but not collected:

On deposition cheques into the bank for collection, the trader debits the same amount in the bank account. The bank credit the amount in the passbook only on getting the amount collected. Such uncleared cheques make the cash book balance to be more than the passbook balance.

3. Direct payment by a customer to the bank:

Customers of the trader occasionally make some payments directly into the trader’s bank account. The trader may come to know of an only later. But the banker gives immediate credit to the trader on receipt of the amount. If it remains unrecorded in the cash book, the balance as per pass book will be more than the balance as per cash book.

4. Interest on deposit credited by the banker:

At regular intervals, banks allow interests on the deposit balance of the trader and credit the amount in the passbook. The same usually remains unrecorded in the cash book. In such a case, the passbook balance will be more than the cash book balance.

5. Interest, dividend, rent, etc. collected by bank:

Bank collects interest, dividend, rent, etc. on behalf of the customer and credits the same to his account. The trader comes to know of it only on a later date. If such collection remains unrecorded in the cash book, the passbook balance will be more than the cash book balance.

6. Payment made on behalf of the customer:

The banker makes payment for rent, insurance, etc., for the customer as per standing instructions. The banker debit the trader’s account with such payments. The trader comes to know of it only later. Due to such payments that remain unrecorded in cash book, the balance as per pass book will be less than the balance as per cash book.

7. Bank charges as per Pass Book:

Bank charges and commission for collection of cheques, bills, etc., are debited in the passbook. The corresponding credits are often not given in the cash book. As these items are not entered in the cash book, its balance will be more than that of the passbook.

8. Bills Receivable discounted, but dishonored: 

When a trader discounts bills of exchange, the banker credits the trader’s account with the amount due. The same amount is debited by the trader in cash book. If such a bill is later dishonored, the banker immediately debits it in the passbook. But the same remains unrecorded in the cash book. This cause the balance as per cash book to be more than the passbook balance.

9. Interest on overdraft debited in passbook:

Periodically the bank calculates interest due by the trader on his overdraft and debits the amount in the passbook. Corresponding credit is often not made by the trader in his cash book. It leads to difference in the balance as per cash book and passbook.

10. Credit instruments credited by bank but not recorded in cash book:

Bills of exchange, promissory notes and other credit instruments collected by bank are credited in the passbook. But if they remain unrecorded in the cash book it may lead to disagreement between the balance as per the two books.

11. There may also be instance of cheque recorded as paid in for collection but failed to be deposited into the bank, by which the cash book balance will be more than the balance as per passbook.