BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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added to the bank statement balance.
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subtracted from the bank statement balance.
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added to the check register balance.
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subtracted from the check register balance.
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Detailed explanation-1: -These checks are called outstanding checks and cause the bank statement balance to overstate the company’s actual cash balance. Since outstanding checks have already been recorded in the company’s books as cash disbursements, they must be subtracted from the bank statement balance.
Detailed explanation-2: -In a bank reconciliation the outstanding checks are a deduction from the bank balance (or balance per the bank statement). If an outstanding check from the previous month did not clear the bank account in the current month, the check will remain on the list of outstanding checks.
Detailed explanation-3: -In preparing a bank reconciliation, outstanding checks should be added back to the ending balance per the bank statement.
Detailed explanation-4: -[Items that are subtracted from the balance per bank on the bank reconciliation include outstanding checks, and bank errors that when corrected will reduce the bank balance.]