Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Bank Reconciliation

Financial Accounting

6. Internal Controls and Reporting Cash

Bank Reconciliation

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Multiple Choice

A bank reconciliation should be prepared periodically because:

It is required by law for all businesses to submit reconciliations to the IRS.

It eliminates the need for internal controls over cash.

It ensures that outstanding checks are immediately canceled by the bank.

It helps identify and correct discrepancies between the company's records and the bank statement.

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Verified step by step guidance

Understand the purpose of a bank reconciliation: It is a process used to compare the company's cash records with the bank statement to identify and correct discrepancies.

Recognize that bank reconciliations are not required by law for submission to the IRS, but they are a best practice for maintaining accurate financial records.

Note that bank reconciliations do not eliminate the need for internal controls over cash. Internal controls are still necessary to prevent fraud and errors.

Understand that outstanding checks are not immediately canceled by the bank during reconciliation. Instead, they remain pending until cleared by the bank.

Conclude that the primary reason for preparing a bank reconciliation is to ensure the accuracy of financial records by identifying and correcting discrepancies between the company's records and the bank statement.