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 must be adjusted to the book balance during the bank reconciliation process?

Deposits in transit

Errors made by the bank

Outstanding 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 bank statement balance with the company's book balance to identify discrepancies and ensure accuracy in financial records.

Identify the items that affect the book balance: Items that must be adjusted to the book balance are those that the company has not yet recorded but are reflected in the bank statement. Examples include bank service charges, interest income, and NSF (non-sufficient funds) checks.

Analyze the given options: Deposits in transit and outstanding checks are timing differences that affect the bank balance, not the book balance. Errors made by the bank are adjustments to the bank balance, not the book balance.

Focus on bank service charges: Bank service charges are fees deducted by the bank that the company may not have recorded yet. These charges must be adjusted to the book balance during the reconciliation process.

Conclude the adjustment process: To reconcile the book balance, add or subtract items like bank service charges, interest income, and NSF checks to ensure the book balance matches the adjusted bank balance.