Multiple Choice
Which of the following is a good reason to balance your checkbook during the bank reconciliation process?
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6. Internal Controls and Reporting Cash
Bank Reconciliation
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Which of the following is NOT a way to avoid an overdraft charge during the bank reconciliation process?
A
Promptly recording all deposits and withdrawals
B
Writing checks without verifying available funds
C
Regularly monitoring your account balance
D
Setting up overdraft protection
Verified step by step guidance1
Understand the concept of overdraft charges: An overdraft charge occurs when you withdraw more money from your account than is available, leading to a negative balance.
Review the options provided in the problem: The goal is to identify which action does NOT help avoid overdraft charges during the bank reconciliation process.
Analyze each option: Promptly recording all deposits and withdrawals helps ensure accurate tracking of your account balance, which can prevent overdrafts. Regularly monitoring your account balance allows you to stay informed about available funds, reducing the risk of overdrafts. Setting up overdraft protection provides a safety net to cover transactions that exceed your balance.
Evaluate the incorrect action: Writing checks without verifying available funds is a behavior that directly leads to overdraft charges, as it disregards the account balance and risks overdrawing the account.
Conclude that the correct answer is the action that does NOT help avoid overdraft charges, which is 'Writing checks without verifying available funds.'
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