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 individuals has correctly balanced their checkbook after receiving a bank statement showing a $50 service charge and $200 in outstanding deposits?

Taylor ignores both the service charge and outstanding deposits when balancing the checkbook.

Alex subtracts the $50 service charge from the checkbook balance and adds the $200 outstanding deposits.

Jordan adds the $50 service charge and subtracts the $200 outstanding deposits from the checkbook balance.

Morgan only subtracts the $50 service charge but does not account for the outstanding deposits.

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Verified step by step guidance

Step 1: Understand the concept of balancing a checkbook. Balancing a checkbook involves reconciling the checkbook balance with the bank statement by accounting for any discrepancies such as service charges, outstanding deposits, or checks that have not cleared.

Step 2: Identify the adjustments needed. In this case, the bank statement shows a $50 service charge (which reduces the checkbook balance) and $200 in outstanding deposits (which increases the checkbook balance). Both adjustments must be considered to correctly balance the checkbook.

Step 3: Analyze the actions of each individual. Taylor ignores both the service charge and outstanding deposits, which means the checkbook is not properly balanced. Morgan subtracts the $50 service charge but does not account for the $200 outstanding deposits, leading to an incomplete reconciliation. Jordan adds the $50 service charge and subtracts the $200 outstanding deposits, which is incorrect as the service charge should reduce the balance and the deposits should increase it.

Step 4: Evaluate Alex's approach. Alex subtracts the $50 service charge from the checkbook balance and adds the $200 outstanding deposits, which correctly accounts for both adjustments and ensures the checkbook is balanced.

Step 5: Conclude that Alex has correctly balanced their checkbook by properly reconciling the checkbook balance with the bank statement, considering both the service charge and outstanding deposits.