Multiple Choice
Which of the following items would increase the depositor's book balance during a bank reconciliation?
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6. Internal Controls and Reporting Cash
Bank Reconciliation
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Which of the following best describes the process of determining that the amount of cash agrees with the accounting records?
A
Bank reconciliation
B
Accrual accounting
C
Inventory valuation
D
Depreciation
Verified step by step guidance1
Understand the concept of bank reconciliation: Bank reconciliation is the process of comparing the bank statement with the company's accounting records to ensure that the cash balance matches and any discrepancies are identified and resolved.
Review the purpose of accrual accounting: Accrual accounting involves recording revenues and expenses when they are incurred, regardless of when cash is exchanged. This is unrelated to reconciling cash balances.
Examine inventory valuation: Inventory valuation is the method used to assign a monetary value to a company's inventory, which is unrelated to cash reconciliation.
Understand depreciation: Depreciation is the allocation of the cost of a tangible asset over its useful life. This concept does not involve reconciling cash balances.
Conclude that the correct answer is bank reconciliation, as it directly involves determining that the amount of cash agrees with the accounting records.
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