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

On a bank reconciliation, interest earned and received but not yet recorded by the company is:

Added to the company's book balance

Added to the bank statement balance

Subtracted from the bank statement balance

Subtracted from the company's book balance

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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 book balance (cash account) with the bank statement balance to identify discrepancies and make adjustments.

Identify the nature of the transaction: Interest earned and received by the company but not yet recorded in the company's books is an adjustment that needs to be made to the book balance.

Determine the impact of the transaction: Since the interest earned increases the company's cash balance, it should be added to the company's book balance during the reconciliation process.

Clarify why it is not added or subtracted from the bank statement balance: The bank statement already reflects the interest earned, so no adjustment is needed on the bank's side.

Conclude the adjustment: The correct action is to add the interest earned to the company's book balance to ensure the reconciliation aligns both balances accurately.