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 best describes what reconciling a bank account involves?

Recording only the deposits made during the month.

Comparing the company's cash records with the bank statement to identify and explain any differences.

Calculating the interest earned on savings accounts.

Preparing the company's income statement.

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Verified step by step guidance

Understand the concept of bank reconciliation: Bank reconciliation is the process of comparing the company's cash records (e.g., the cash ledger or cash book) with the bank statement to identify and explain any differences between the two.

Identify the purpose of reconciliation: The goal is to ensure that the company's financial records are accurate and match the bank's records. This helps detect errors, omissions, or fraudulent activities.

Eliminate incorrect options: For example, 'Recording only the deposits made during the month' is incorrect because reconciliation involves more than just deposits; it includes withdrawals, fees, and other transactions. Similarly, 'Calculating the interest earned on savings accounts' and 'Preparing the company's income statement' are unrelated to the reconciliation process.

Focus on the correct description: The correct answer is 'Comparing the company's cash records with the bank statement to identify and explain any differences.' This accurately describes the reconciliation process.

Conclude with the importance of reconciliation: Regularly reconciling bank accounts ensures the accuracy of financial records, helps maintain proper cash management, and supports the preparation of reliable financial statements.