The difference that arises between the balance on the bank statement and the balance on the company's books because of a time lag in recording transactions is known as a permanent difference.

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The difference that arises between the balance on the bank statement and the balance on the company's books because of a time lag in recording transactions is known as a timing difference, not a permanent difference. Permanent differences are differences in accounting treatment that cannot be reconciled, such as non-deductible expenses or non-taxable income.

The Difference That Arises Between the Balance on the Bank