Multiple Choice
Which of the following is a primary benefit of maintaining a checking account for bank reconciliation purposes?
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6. Internal Controls and Reporting Cash
Bank Reconciliation
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Which of the following transactions is most likely to have caused John to overdraw his bank account?
A
John deposited a $200 check that cleared immediately.
B
John received a direct deposit of his $1,000 salary.
C
John transferred $100 from his savings to his checking account.
D
John wrote a check for $500 when his account balance was $400.
Verified step by step guidance1
Understand the concept of overdrawing: Overdrawing occurs when the amount withdrawn from a bank account exceeds the available balance, resulting in a negative balance.
Analyze each transaction: Review the impact of each transaction on John's account balance to determine which one could lead to an overdraft.
Evaluate the first three transactions: Depositing a $200 check that cleared immediately, receiving a $1,000 direct deposit, and transferring $100 from savings to checking all increase the account balance and cannot cause an overdraft.
Examine the fourth transaction: Writing a $500 check when the account balance is $400 would result in an overdraft because the withdrawal exceeds the available funds by $100.
Conclude that the fourth transaction is the most likely cause of the overdraft, as it directly leads to a negative balance in John's account.
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