Multiple Choice
Which of the following is a common way to access money in a checking account?
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6. Internal Controls and Reporting Cash
Bank Reconciliation
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Which of the following actions can help reduce or avoid bank service charges and fees when managing your business's bank account?
A
Ignore monthly bank statements and reconciliations.
B
Write checks without recording them in your journal.
C
Make frequent overdrafts to cover expenses.
D
Maintain the minimum required balance in your account.
Verified step by step guidance1
Understand the concept of bank service charges and fees: These are costs incurred by businesses for using banking services, such as overdraft fees, account maintenance fees, or transaction fees.
Recognize the importance of maintaining the minimum required balance: Many banks waive service charges if the account holder maintains a minimum balance as specified in the account agreement.
Avoid actions that lead to additional fees: Ignoring monthly bank statements and reconciliations can result in unnoticed errors or overdrafts. Writing checks without recording them in your journal can lead to mismanagement of funds, and frequent overdrafts can incur significant fees.
Implement good financial practices: Regularly review bank statements, reconcile accounts, and ensure all transactions are accurately recorded in your journal to avoid unnecessary fees.
Focus on maintaining the minimum required balance: This is a proactive measure to avoid service charges and ensure smooth management of your business's bank account.
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