BUISENESS MANAGEMENT
MERCHANDISING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Additions to the cash balance according to the company’s records.
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Deductions from the cash balance according to the company’s records.
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Both A and B.
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Neither A nor B.
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Detailed explanation-1: -Journal entries are required in a bank reconciliation when there are adjustments to the balance per books. These adjustments result from items appearing on the bank statement that have not been recorded in the company’s general ledger accounts.
Detailed explanation-2: -The items on the bank reconciliation that require a journal entry are the items noted as adjustments to books. These are the items that appear on the bank statement, but are not yet recorded in the company’s general ledger accounts.
Detailed explanation-3: -Answer and Explanation: Outstanding checks are recorded already in the book, so it is a bank reconciling item. The company would prepare journal entries for book reconciling items only. Thus, outstanding checks do not need journal entry.
Detailed explanation-4: -Reconciling item per banks are items that are not yet recorded, or improperly recorded by the bank but are already properly recorded in the Company’s books. This will not require a journal entry as these items were already properly entered in the books. These items would require adjustments on bank records.