Multiple Choice
If the formula in cell D49 is '=C49+B49' and it is copied to cell E49 in a bank reconciliation worksheet, what will the formula in cell E49 become?
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6. Internal Controls and Reporting Cash
Bank Reconciliation
Multiple Choice
Which of the following statements is TRUE regarding the purpose of a bank reconciliation?
A
A bank reconciliation is used to identify and explain differences between the cash balance per books and the cash balance per bank statement.
B
A bank reconciliation is only necessary when there is suspected fraud.
C
A bank reconciliation is required only at the end of the fiscal year.
D
A bank reconciliation is used to record interest revenue earned on investments.
Verified step by step guidance1
Understand the purpose of a bank reconciliation: A bank reconciliation is a process used to compare the cash balance recorded in the company's books with the cash balance reported on the bank statement. The goal is to identify and explain any differences between the two balances.
Clarify common misconceptions: A bank reconciliation is not only necessary when there is suspected fraud. It is a routine process performed regularly (e.g., monthly) to ensure accuracy in financial records.
Address the timing of bank reconciliations: A bank reconciliation is not limited to the end of the fiscal year. It is typically performed at the end of each accounting period to maintain accurate records.
Explain the scope of bank reconciliations: While a bank reconciliation may involve recording interest revenue earned on investments, its primary purpose is broader. It includes identifying outstanding checks, deposits in transit, and any errors or discrepancies.
Conclude with the correct statement: The true purpose of a bank reconciliation is to identify and explain differences between the cash balance per books and the cash balance per bank statement, ensuring the accuracy of financial records.
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