BUISENESS MANAGEMENT
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Add outstanding checks and subtract deposits made since the statement.
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Add deposits and checks made since the statement.
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Add outstanding deposits and subtract outstanding checks written since statement.
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None of the above
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Detailed explanation-1: -In the bank reconciliation process, the total amount of outstanding checks is subtracted from the ending balance on the bank statement when computing the adjusted balance per bank. (No adjustment is needed to the company’s general ledger accounts, since the outstanding checks were recorded when they were issued.)
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: -Outstanding checks. 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-4: -Deposits in transit would be added to the balance per bank statement in a bank reconciliation.