Question: Select the alternative that best answers each question or completes each statement. 1. Bank reconciliation should be prepared periodically because a. the records of the

Select the alternative that best answers each question or completes each statement.

1. Bank reconciliation should be prepared periodically because a. the records of the company and the records according to the bank always agree. b. the bank has not fully recorded the transactions. c. It must be determined which items cause any differences between the records of the company and the records according to the bank. d. the bank wants to be sure that its records are entirely correct.

2. A bank reconciliation must be prepared a. each time the banking institution refuses to lend you money. b. to explain any differences between the company's records and the balance reflected on the account statement issued by the bank. c. when there is suspicion of the commission of an act indicative of fraud. d. by the person authorized to sign checks for the account.

3. Which of the following does NOT cause a decrease in the cash balance according to the company's records? a. bank service charges b. Collection of a promissory note or note receivable c. check returned for insufficient funds (NSF check) d. outstanding checks

4. Which of the following items should be subtracted from the balance sheet according to the company's records when preparing the bank reconciliation? a. outstanding checks b. deposits in transit c. promissory notes (notes receivable) collected by the bank d. bank service charges

5. Along with the bank statement, you receive a notification of a short-term note receivable collected by the bank. This item must be included as a. is subtracted from the cash balance according to company records. b. is added to the balance according to the bank statement. c. is subtracted from the balance according to the bank statement. d. is added to the cash balance according to company records.

6. The following situation may result in an increase or decrease being noted to the cash balance according to company records: a. outstanding checks b. deposits in transit (deposits in transit) c. correction of errors in bank records (bank errors) d. correcting errors in company records

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