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 should be added to the book balance during a bank reconciliation?

Deposits in transit

Bank service charges

Outstanding checks

Interest earned on the bank account

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Verified step by step guidance

Understand the purpose of a bank reconciliation: It is a process to ensure that the bank statement and the company's book balance match by identifying discrepancies and making adjustments.

Identify the items listed in the problem: Deposits in transit, bank service charges, outstanding checks, and interest earned on the bank account.

Determine the impact of each item on the book balance: Deposits in transit and outstanding checks affect the bank statement, not the book balance. Bank service charges reduce the book balance, while interest earned increases the book balance.

Focus on the item that should be added to the book balance: Interest earned on the bank account is an income that the company has not yet recorded in its books, so it needs to be added to the book balance during reconciliation.

Conclude that during a bank reconciliation, interest earned on the bank account is the correct item to be added to the book balance, as it represents an increase in the company's cash that has not yet been recorded in the books.