Multiple Choice
Which of the following is the most effective way to reconcile your bank account to ensure you do not spend more than you have?
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6. Internal Controls and Reporting Cash
Bank Reconciliation
Multiple Choice
Which of the following is typically considered a fee that may be charged to a checking account and would appear on a bank reconciliation statement?
A
Outstanding check
B
Monthly service charge
C
Deposits in transit
D
Interest earned
Verified step by step guidance1
Understand the concept of a bank reconciliation statement: A bank reconciliation statement is a document that compares the bank's records with the company's accounting records to identify discrepancies and ensure accuracy. Fees charged to a checking account are typically included in this reconciliation process.
Identify the types of items listed in the problem: The options provided include 'Outstanding check,' 'Monthly service charge,' 'Deposits in transit,' and 'Interest earned.' Each of these items has a specific role in the reconciliation process.
Clarify the nature of a monthly service charge: A monthly service charge is a fee imposed by the bank for maintaining the checking account. This fee is deducted directly from the account balance and would appear on the bank statement, requiring adjustment in the company's records during reconciliation.
Differentiate the other options: 'Outstanding check' refers to checks issued by the company but not yet cleared by the bank, 'Deposits in transit' are deposits made by the company but not yet recorded by the bank, and 'Interest earned' is income credited to the account by the bank. These items are not fees but adjustments made during reconciliation.
Conclude that the monthly service charge is the correct answer: Since it is a fee charged to the account and directly affects the balance, it is the item that would appear on the bank reconciliation statement as a deduction.
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