Ans. While both a cash book and a bank statement provide information about financial transactions, they serve different purposes and have different characteristics:
- Cash book: A cash book records all cash transactions, including both cash receipts and cash payments, that occur within a business. It is maintained by the business itself and provides an internal record of cash movements.
- Bank statement: A bank statement, on the other hand, is a document provided by a bank to its account holders, showing all the transactions that have occurred in their bank account. It includes not only cash transactions but also checks, electronic transfers, and other forms of payment. It provides an external record of cash movements and is used to reconcile with the cash book to ensure accuracy.