Multiple Choice
In which of the following scenarios would you record a bank deposit transaction in the accounting records?
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6. Internal Controls and Reporting Cash
Bank Reconciliation
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On a bank reconciliation, a bank fee for check printing not yet recorded by the company is:
A
added to the company's book balance
B
added to the bank statement balance
C
deducted from the company's book balance
D
deducted from the bank statement balance
Verified step by step guidance1
Understand the concept of a bank reconciliation: It is a process used to compare the company's book balance (cash account) with the bank statement balance to identify discrepancies and make adjustments.
Identify the nature of the transaction: A bank fee for check printing is an expense incurred by the company but not yet recorded in the company's books.
Determine the impact on the company's book balance: Since the fee represents a reduction in cash, it must be deducted from the company's book balance to reflect the correct cash position.
Recognize that the bank statement balance already includes the fee: The bank has already deducted the fee from the account, so no adjustment is needed to the bank statement balance.
Record the adjustment in the company's books: Deduct the fee from the company's book balance by creating a journal entry that debits the expense account (e.g., 'Bank Fees') and credits the cash account.
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