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

In preparing a bank reconciliation, which of the following items should be added to the balance per books?

Deposits in transit

Outstanding checks

Interest earned on the bank account

Bank service charges

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Verified step by step guidance

Understand the purpose of a bank reconciliation: It is a process to reconcile the balance per books (company's cash account) with the balance per bank statement, identifying any discrepancies and ensuring accuracy.

Identify the items listed in the problem: Deposits in transit, outstanding checks, interest earned on the bank account, and bank service charges. Determine how each affects the balance per books or the balance per bank statement.

Focus on the balance per books: The balance per books represents the company's cash account. Adjustments to this balance are made for items that the company has not yet recorded but are reflected in the bank statement.

Determine which items affect the balance per books: Deposits in transit and outstanding checks do not affect the balance per books because they are timing differences between the company and the bank. Interest earned on the bank account and bank service charges, however, are items that the company needs to record in its books.

Add interest earned to the balance per books: Since interest earned increases the cash balance, it should be added to the balance per books during the reconciliation process. Bank service charges, on the other hand, would be subtracted from the balance per books.