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

In the context of bank reconciliation, what is an outstanding check?

A check that has been returned by the bank due to insufficient funds.

A check that has been written and recorded in the company's books but has not yet cleared the bank.

A check that has been deposited and cleared by the bank.

A check that has been canceled by the company before being presented to the bank.

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Verified step by step guidance

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

Define an outstanding check: An outstanding check is a check that has been issued and recorded in the company's accounting records but has not yet been cleared or processed by the bank.

Clarify the implications of an outstanding check: Since the check has not cleared, it will not appear as a deduction in the bank statement, even though the company has already recorded it as a reduction in its cash balance.

Differentiate outstanding checks from other types of checks: For example, a check returned due to insufficient funds is not considered outstanding, as it has already been processed by the bank but rejected. Similarly, canceled checks or cleared checks are not outstanding.

Apply this understanding to the problem: The correct answer is the definition of an outstanding check, which is 'A check that has been written and recorded in the company's books but has not yet cleared the bank.'