Bank Reconciliation Process

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Questions and Answers

Which slip is used to withdraw money from the bank?

Withdrawal slip (correct)
Deposit slip
Transfer slip
Cash slip

The discrepancy caused by entering an incorrect amount in a cash account is labeled as what?

Confusions
Errors (correct)
Inaccuracies
Mistakes

The method in which the bank deducts charges from the statement without notification is known as what?

Automatic deduction
Bank errors
Transaction fees
Bank charges (correct)

If a company's cash account increases due to bank reconciliation, this is referred to as what?

Book to bank (A) Signup and view all the answers

In bank reconciliations, monthly preparation is essential for what purpose?

Monitoring cash flows (A) Signup and view all the answers

Which situation reflects cash collected that is recorded but not deposited in the bank?

Time lags (A) Signup and view all the answers

What is the primary goal of preparing bank reconciliation statements?

To identify accounting errors (B) Signup and view all the answers

When is an error in the accounting record identified through bank reconciliation?

During monthly checks (A) Signup and view all the answers

What is the first step in the bank reconciliation process?

Compare the bank statement with the cash book (C) Signup and view all the answers

Which step in bank reconciliation involves adjusting the bank balance for deposits that have not yet cleared?

Step 3 (C) Signup and view all the answers

What do outstanding checks refer to in the bank reconciliation process?

Checks that have not been cleared by the bank (A) Signup and view all the answers

What is the purpose of identifying bank fees in the reconciliation process?

To adjust the cash book balance (B) Signup and view all the answers

Which step would likely occur last in the bank reconciliation process?

Finalizing adjustments to the cash book (C) Signup and view all the answers

If the bank charged for the check plus a bank fee for checks with insufficient balance, what is this called?

Non-sufficient funds (D) Signup and view all the answers

What is typically recorded during the bank reconciliation process?

Differences between bank and book balances (A) Signup and view all the answers

Why is documenting errors important within the bank reconciliation process?

To maintain accurate financial records (D) Signup and view all the answers

What does a bank reconciliation identify?

Discrepancies between the bank balance and the company's records. (A) Signup and view all the answers

Which statement is true regarding the bank statement for August 2019?

A customer check was returned due to non-sufficient funds. (C) Signup and view all the answers

Which of the following transactions would be considered a deposit in transit?

An amount recorded in the company's cash account not recorded by the bank. (B) Signup and view all the answers

What happens to the company's balance when a service charge is deducted?

It decreases by the service charge amount. (B) Signup and view all the answers

Which of the following best describes an outstanding check?

A check issued by the company that has not yet been presented to the bank. (A) Signup and view all the answers

What is the effect of recording an incorrect amount in the bank's records?

It causes discrepancies during bank reconciliation. (D) Signup and view all the answers

Which of the following would NOT affect a bank reconciliation?

Changes to the bank's interest rates. (C) Signup and view all the answers

If a company's Cash account shows a balance of Php967, what could be a reason for the discrepancy?

Some outstanding checks have not cleared. (A) Signup and view all the answers

What is the primary purpose of a bank reconciliation statement?

To compare the bank balance as per company's records with the bank statement balance. (C) Signup and view all the answers

Which of the following is a common cause of discrepancies between a company's records and bank statements?

Timing differences that prevent both parties from recording transactions at the same time. (C) Signup and view all the answers

What was the recorded amount for Check No. 345 by Eagle's bookkeeper?

P5,205 (C) Signup and view all the answers

What amount did Nation Bank collect from the customer of Eagle?

P5,000 (B) Signup and view all the answers

Why is regular preparation of bank reconciliations important for a business?

It aids in the identification of errors in accounting records. (A) Signup and view all the answers

What is the significance of the bank statement balance being confirmed as correct?

It gives assurance that bank transactions are accurately recorded. (B) Signup and view all the answers

What does cash represent in terms of vulnerabilities for a business?

It is the highest risk asset susceptible to fraud. (A) Signup and view all the answers

What does the term 'time lags' refer to in bank reconciliations?

The period during which not all transactions have been recorded by either party. (A) Signup and view all the answers

What is the total amount deposited on 5/26/2019?

$7,800 (D) Signup and view all the answers

Which date shows the largest single deposit amount?

5/10/2019 (B) Signup and view all the answers

When is the deadline for the company to deposit collections following the date of collection?

The next business day (B) Signup and view all the answers

Which collection amount belongs to Ayesha?

$4,780 (B) Signup and view all the answers

How many deposits were made in total for May 2019 as listed?

5 (B) Signup and view all the answers

What is the total undeposited collection at the end of May 2019 based on given data?

$4,500 (A) Signup and view all the answers

Which deposit date coincides with Ayesha's collection?

5/31/2019 (A) Signup and view all the answers

What calculation would you perform to determine the total collections made on the 5/31/2019 deposits?

Adding Ayesha's and Angelo's collections (B) Signup and view all the answers

What are outstanding checks?

Checks written and recorded but not yet cleared the bank. (D) Signup and view all the answers

What is a deposit in transit?

Amounts already received and recorded by the company but not yet by the bank. (A) Signup and view all the answers

Which term describes errors made by the bank?

Bank errors. (D) Signup and view all the answers

What happens when the bank earns interest on the company's account balance?

Interest earned appears on the bank statement and is added to the balance. (B) Signup and view all the answers

What are notes receivable considered?

Assets of a company. (A) Signup and view all the answers

What are bank service charges?

Fees deducted from the bank statement for processing activities. (D) Signup and view all the answers

Which of the following is an example of an error in the company's Cash account?

The company omitting a transaction that should be recorded. (A) Signup and view all the answers

What results from processing an incorrect amount by the bank?

Bank error is recorded in the bank statement. (B) Signup and view all the answers

Flashcards

Bank Reconciliation

The process of comparing a company's cash records with its bank statement to identify and resolve discrepancies.

Insufficient Funds

A situation where a check is presented for payment, but there are insufficient funds in the account to cover it.

Bank Charges

Fees or costs imposed by the bank on the account holder for various services.

Reconciliation Steps

A systematic process to identify and correct discrepancies between the balance per company's records and the balance per bank statement.