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 is used to adjust the bank’s balance of cash in a bank reconciliation?

Outstanding checks

Company recording errors

NSF (non-sufficient funds) checks

Bank service charges

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Verified step by step guidance

Step 1: Understand the concept of bank reconciliation. Bank reconciliation is the process of comparing the company's cash records with the bank statement to identify discrepancies and ensure accuracy.

Step 2: Identify the items that affect the bank's balance in a bank reconciliation. These typically include outstanding checks, deposits in transit, and any errors made by the bank.

Step 3: Analyze the given options. Outstanding checks are payments issued by the company that have not yet cleared the bank, which reduce the bank's balance. Company recording errors affect the company's books, not the bank's balance. NSF checks and bank service charges are adjustments to the company's books, not the bank's balance.

Step 4: Focus on the item that directly impacts the bank's balance. Outstanding checks are subtracted from the bank's balance because they represent payments that the bank has not yet processed.

Step 5: Conclude that the correct item used to adjust the bank's balance in a bank reconciliation is outstanding checks, as they directly affect the bank's reported cash balance.