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The book in which those small payments are recorded, which are not convenient to record in
main Cash Book, is called petty cash book.
1.3.2 Liabilities
A liability is something a person or company owes, usually a sum of money. Liabilities are settled
over time through the transfer of economic benefits including money, goods, or services.
Bank overdraft - cash book and bank reconciliation statement
Overdraft means overdrawing of a bank account. It is the nature of a loan granted by the bank.
When there is overdraft the situation will just opposite to that when there is a favorable
balance. Hence, reverse steps would, of course, be taken while preparing Bank Reconciliation
Statement. When there is an overdraft, the bank Pass Book shows a debit balance and the Bank
Account in the Cash Book shows a credit balance.
Illustration 1:
From the following particulars, ascertain the balance by means of a statement, that would
appear in the pass Book of Ramlal and Sons, as on 31st December.
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