Bank Reconciliation and Cash Balance

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What must be the case if the balance shown on a company's bank statement is less than the correct cash balance and neither the company nor the bank has made any errors?

There are outstanding checks that have not been deducted.

The company has made an error in recording deposits.

There are deposits credited by the bank but not yet recorded by the company. (correct)

The bank has charged the company's account with a loan reduction.

What must be deducted from the bank statement balance in preparing a bank reconciliation?

Deposits in transit

Outstanding checks (correct)

Certified checks

NSF customer checks

What is the purpose of a bank reconciliation?

To account for the differences between the bank statement and general ledger cash balances. (correct)

To prepare a formal financial statement listing all bank account balances.

To send a monthly statement to the depositor.

To merge two banks that were previously competitors.

What is the result of a bank reconciliation?

An adjusted cash balance that is higher than the bank statement balance. Signup and view all the answers

What is the purpose of adding deposits in transit to the cash balance per ledger?

To increase the general ledger cash balance. Signup and view all the answers

What is the purpose of deducting outstanding checks from the bank statement balance?

To decrease the bank statement balance. Signup and view all the answers

What is the purpose of a four-column bank reconciliation?

To reconcile cash balances per book and per bank at the beginning and end of the current month, and reconcile cash receipts and cash disbursements of the bank and the depositor during the current month Signup and view all the answers

What would cause the cash balance per ledger to be higher than that reported by the bank?

Outstanding checks Signup and view all the answers

What would require a correcting entry in the depositor's own records?

Error made by the bank Signup and view all the answers

Which of the following would not require an adjusting entry on the depositor's books?

NSF check from customer Signup and view all the answers

If the cash balance shown on a company's accounting records is less than the correct cash balance and neither the company nor the bank has made any errors, what could be the reason?

Deposits credited by the bank but not yet recorded by the company Signup and view all the answers

What would be the result of a bank error, such as incorrectly charging an amount to the depositor's account?

An adjusting entry would be required on the depositor's books Signup and view all the answers

What is the correct cash balance to be shown in the statement of financial position?

P134,700 Signup and view all the answers

What is the unadjusted cash balance per books?

P105,300 Signup and view all the answers

What is the amount of payments recorded by Sony before the bank service charge?

P13,250 Signup and view all the answers

What is the amount of interest collected by Nitendo Co.?

P1,200 Signup and view all the answers

What is the purpose of a bank reconciliation statement?

To ensure the accuracy of the cash balance Signup and view all the answers

What is the effect of deposits in transit on the cash balance?

Increases the cash balance Signup and view all the answers

Bank Reconciliation and Cash Balance

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