Multiple Choice
How many steps are typically involved in the process of bank statement reconciliation as described in standard accounting procedures?
20
views
6. Internal Controls and Reporting Cash
Bank Reconciliation
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
If a payment is directly deducted from your bank account but not yet recorded in your company's books, how should this be treated during the bank reconciliation process?
A
It should be added to the book balance.
B
It should be subtracted from the bank balance.
C
It should be added to the bank balance.
D
It should be subtracted from the book balance.
Verified step by step guidance1
Understand the concept of bank reconciliation: Bank reconciliation is the process of comparing the company's book balance (cash account) with the bank statement to identify discrepancies and ensure accuracy.
Identify the nature of the transaction: A payment deducted from the bank account but not yet recorded in the company's books represents an unrecorded expense or withdrawal.
Determine the impact on the book balance: Since the payment has already been deducted from the bank account, the company's book balance must be adjusted to reflect this transaction.
Apply the adjustment: To reconcile the book balance, subtract the amount of the payment from the book balance because it represents an expense that has not yet been recorded.
Verify the reconciliation: After making the adjustment, ensure that the adjusted book balance matches the bank statement balance, accounting for all other reconciling items.
4:57mWatch next
Master Bank Reconciliation:Bank Column with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Bank Reconciliation practice set
Problem sets built by lead tutorsExpert video explanations