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

Which of the following items used to reconcile cash does NOT require an adjusting entry in the accounting records?

Interest earned on bank account

Deposits in transit

NSF (non-sufficient funds) checks

Bank service charges

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Verified step by step guidance

Understand the concept of bank reconciliation: Bank reconciliation is the process of comparing the company's cash records with the bank statement to identify discrepancies and ensure accuracy.

Identify items that require adjusting entries: Adjusting entries are necessary for items that affect the company's accounting records but are not yet recorded, such as interest earned, NSF checks, and bank service charges.

Analyze deposits in transit: Deposits in transit are amounts that have been recorded in the company's books but have not yet been processed by the bank. These do not require adjusting entries because they are already accounted for in the company's records.

Compare the other options: Interest earned, NSF checks, and bank service charges all require adjustments because they impact the company's cash balance and need to be recorded in the accounting system.

Conclude that deposits in transit do not require an adjusting entry, as they are timing differences between the company's records and the bank statement, not unrecorded transactions.