Podcast
Questions and Answers
Which slip is used to withdraw money from the bank?
Which slip is used to withdraw money from the bank?
The discrepancy caused by entering an incorrect amount in a cash account is labeled as what?
The discrepancy caused by entering an incorrect amount in a cash account is labeled as what?
The method in which the bank deducts charges from the statement without notification is known as what?
The method in which the bank deducts charges from the statement without notification is known as what?
If a company's cash account increases due to bank reconciliation, this is referred to as what?
If a company's cash account increases due to bank reconciliation, this is referred to as what?
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In bank reconciliations, monthly preparation is essential for what purpose?
In bank reconciliations, monthly preparation is essential for what purpose?
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Which situation reflects cash collected that is recorded but not deposited in the bank?
Which situation reflects cash collected that is recorded but not deposited in the bank?
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What is the primary goal of preparing bank reconciliation statements?
What is the primary goal of preparing bank reconciliation statements?
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When is an error in the accounting record identified through bank reconciliation?
When is an error in the accounting record identified through bank reconciliation?
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What is the first step in the bank reconciliation process?
What is the first step in the bank reconciliation process?
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Which step in bank reconciliation involves adjusting the bank balance for deposits that have not yet cleared?
Which step in bank reconciliation involves adjusting the bank balance for deposits that have not yet cleared?
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What do outstanding checks refer to in the bank reconciliation process?
What do outstanding checks refer to in the bank reconciliation process?
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What is the purpose of identifying bank fees in the reconciliation process?
What is the purpose of identifying bank fees in the reconciliation process?
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Which step would likely occur last in the bank reconciliation process?
Which step would likely occur last in the bank reconciliation process?
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If the bank charged for the check plus a bank fee for checks with insufficient balance, what is this called?
If the bank charged for the check plus a bank fee for checks with insufficient balance, what is this called?
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What is typically recorded during the bank reconciliation process?
What is typically recorded during the bank reconciliation process?
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Why is documenting errors important within the bank reconciliation process?
Why is documenting errors important within the bank reconciliation process?
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What does a bank reconciliation identify?
What does a bank reconciliation identify?
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Which statement is true regarding the bank statement for August 2019?
Which statement is true regarding the bank statement for August 2019?
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Which of the following transactions would be considered a deposit in transit?
Which of the following transactions would be considered a deposit in transit?
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What happens to the company's balance when a service charge is deducted?
What happens to the company's balance when a service charge is deducted?
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Which of the following best describes an outstanding check?
Which of the following best describes an outstanding check?
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What is the effect of recording an incorrect amount in the bank's records?
What is the effect of recording an incorrect amount in the bank's records?
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Which of the following would NOT affect a bank reconciliation?
Which of the following would NOT affect a bank reconciliation?
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If a company's Cash account shows a balance of Php967, what could be a reason for the discrepancy?
If a company's Cash account shows a balance of Php967, what could be a reason for the discrepancy?
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What is the primary purpose of a bank reconciliation statement?
What is the primary purpose of a bank reconciliation statement?
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Which of the following is a common cause of discrepancies between a company's records and bank statements?
Which of the following is a common cause of discrepancies between a company's records and bank statements?
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What was the recorded amount for Check No. 345 by Eagle's bookkeeper?
What was the recorded amount for Check No. 345 by Eagle's bookkeeper?
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What amount did Nation Bank collect from the customer of Eagle?
What amount did Nation Bank collect from the customer of Eagle?
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Why is regular preparation of bank reconciliations important for a business?
Why is regular preparation of bank reconciliations important for a business?
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What is the significance of the bank statement balance being confirmed as correct?
What is the significance of the bank statement balance being confirmed as correct?
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What does cash represent in terms of vulnerabilities for a business?
What does cash represent in terms of vulnerabilities for a business?
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What does the term 'time lags' refer to in bank reconciliations?
What does the term 'time lags' refer to in bank reconciliations?
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What is the total amount deposited on 5/26/2019?
What is the total amount deposited on 5/26/2019?
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Which date shows the largest single deposit amount?
Which date shows the largest single deposit amount?
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When is the deadline for the company to deposit collections following the date of collection?
When is the deadline for the company to deposit collections following the date of collection?
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Which collection amount belongs to Ayesha?
Which collection amount belongs to Ayesha?
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How many deposits were made in total for May 2019 as listed?
How many deposits were made in total for May 2019 as listed?
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What is the total undeposited collection at the end of May 2019 based on given data?
What is the total undeposited collection at the end of May 2019 based on given data?
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Which deposit date coincides with Ayesha's collection?
Which deposit date coincides with Ayesha's collection?
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What calculation would you perform to determine the total collections made on the 5/31/2019 deposits?
What calculation would you perform to determine the total collections made on the 5/31/2019 deposits?
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What are outstanding checks?
What are outstanding checks?
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What is a deposit in transit?
What is a deposit in transit?
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Which term describes errors made by the bank?
Which term describes errors made by the bank?
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What happens when the bank earns interest on the company's account balance?
What happens when the bank earns interest on the company's account balance?
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What are notes receivable considered?
What are notes receivable considered?
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What are bank service charges?
What are bank service charges?
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Which of the following is an example of an error in the company's Cash account?
Which of the following is an example of an error in the company's Cash account?
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What results from processing an incorrect amount by the bank?
What results from processing an incorrect amount by the bank?
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Study Notes
Bank Reconciliation
- Bank reconciliation is a process to compare the company's cash records with the bank's records.
- It identifies discrepancies between the two sets of records.
- This ensures the accuracy of the company's cash balance.
Bank Reconciliation Steps
- Step 1: Compare the bank statement balance with the company's book balance.
- Step 2: Identify reconciling items (items that affect one record but not the other).
- Step 3: Adjust the bank balance to reflect the company's cash on hand (transactions not yet recorded by the bank).
- Step 4: Adjust the book balance to reflect the bank's records (transactions not yet recorded by the company).
- Step 5: Reconcile the adjusted balances to ensure they match.
Reconciling Items
- Deposits in Transit: Deposits recorded by the company but not yet recorded by the bank.
- Outstanding Checks: Checks written by the company but not yet cashed by the recipient.
- Bank Errors: Mistakes made by the bank (e.g., incorrect amounts, omissions).
- Book Errors: Mistakes made by the company (e.g., incorrect amounts, omissions, recording errors).
- Bank Service Charges: Fees charged by the bank.
- NSF Checks: Checks returned by the bank because of insufficient funds.
- Notes Receivable Collected by the Bank: When the bank collects a note receivable for the company.
- Interest Earned: Interest credited to the company's account.
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Description
This quiz covers the essential steps involved in bank reconciliation. It focuses on how to compare cash records between a company and its bank, identify discrepancies, and make necessary adjustments. Test your understanding of key components like deposits in transit and outstanding checks.
