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 should NOT be included when interpreting a bank statement?

Bank service charges

Company's petty cash balance

Deposits in transit

Outstanding checks

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Verified step by step guidance

Step 1: Understand the purpose of a bank statement. A bank statement is a summary provided by the bank that shows all transactions in a bank account over a specific period, including deposits, withdrawals, and fees.

Step 2: Identify the items typically included in a bank statement. These include bank service charges, deposits in transit, and outstanding checks, as they directly relate to the reconciliation of the bank account.

Step 3: Recognize that the company's petty cash balance is not part of the bank statement. Petty cash is a small amount of cash kept on hand for minor expenses and is managed separately from the bank account.

Step 4: Understand the reconciliation process. When interpreting a bank statement, you reconcile the bank's records with the company's records by accounting for items like deposits in transit and outstanding checks.

Step 5: Conclude that the company's petty cash balance should NOT be included when interpreting a bank statement, as it is unrelated to the transactions recorded by the bank.