Direct collections received by the bank on behalf of the customers would increase the balance as per the bank passbook when compared to the balance as per the cash book.
True. When the bank receives direct collections (such as interest, dividends, or direct deposits from debtors) on behalf of the customer, the amount is immediately credited in the bank's records. However, the firm is unaware of this transaction until it receives the bank statement. Consequently, the cash book remains unchanged while the bank passbook balance increases, resulting in a higher balance in the passbook compared to the cash book.
Explanation
The provided context explicitly confirms this statement in point 8. Additionally, sections 5.1.1(d) and 5.1.1(e) explain the mechanism: the bank credits the account immediately upon collection, but the firm only records it in the cash book after receiving intimation (the bank statement). This timing difference causes the passbook balance to be greater than the cash book balance during that period.