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From page 4-4 of the VLN, in a bank reconciliation how is a NSF check treated? A. Add to the company cash ledger balance B. Subtract from the company cash ledger balance C. Add to the bank statement balance D. Subtract from the bank statement balance

From page 4-4 of the VLN, in a bank reconciliation how is a NSF check treated? A. Add to the company cash ledger balance B. Subtract from the company cash ledger balance C. Add to the bank statement balance D. Subtract from the bank statement balance

Century 21 Accounting General Journal
Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter5: Cash Control Systems
Section5.2: Bank Reconciliation
Problem 1OYO
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From page 4-4 of the VLN, in a bank reconciliation how is a NSF check treated? A. Add to the company cash ledger balance B. Subtract from the company cash ledger balance C. Add to the bank statement balance D. Subtract from the bank statement balance
Bank Reconciliation Timing differences and/or Errors BANK'S RECORD СOMPANY COMPANY'S RECORD BANK The bank statement represents the bank's record of the company's account at the bank. The company's cash account in the general ledger is the company's АСCOUNT Both records are record of the company's bank keeping track of account. this account. The bank statement shows the ending They should be The cash account shows the ending the same. balance of the account before the bank balance before it is reconciled. It is account is reconciled. It is the balance the balance before reconciliation. before reconciliation. The goal is to get both documents to be the same, by including everything, and fixing errors where they exist. Bank Reconciliation Bank Statement Company's Cash Ledger Balance Before reconciliation Balance Before reconciliation + outstanding deposits - outstanding checks +Notes received/collected by bank +Interest received +/- bank errors -NSF checks -unrecorded debit cards and EFTS -Bank service fees +/- company errors Balance After reconciliation Balance After reconciliation Bank Account (Statement) Company Cash Account (Ledger) |+/- items that are recorded in the Company +/- items that are recorded on the Bank |Cash account (ledger) but HAVE NOT been Statement but HAVE NOT been recorded in the recorded on the Bank statement. Examples: |- outstanding checks + outstanding deposits (deposits in transit) Company Cash account (ledger). For example: |+Notes received/collected by bank +Interest received |-NSF checks |-unrecorded debit cards and EFTS |-Bank service fees Fix errors where they exist Fix errors where they exist The goal is to get both to be the same (by including everything); they both represent the Company's bank account. After the bank reconciliation is completed, make sure to record the changes made to the cash account.
Transcribed Image Text:Bank Reconciliation Timing differences and/or Errors BANK'S RECORD СOMPANY COMPANY'S RECORD BANK The bank statement represents the bank's record of the company's account at the bank. The company's cash account in the general ledger is the company's АСCOUNT Both records are record of the company's bank keeping track of account. this account. The bank statement shows the ending They should be The cash account shows the ending the same. balance of the account before the bank balance before it is reconciled. It is account is reconciled. It is the balance the balance before reconciliation. before reconciliation. The goal is to get both documents to be the same, by including everything, and fixing errors where they exist. Bank Reconciliation Bank Statement Company's Cash Ledger Balance Before reconciliation Balance Before reconciliation + outstanding deposits - outstanding checks +Notes received/collected by bank +Interest received +/- bank errors -NSF checks -unrecorded debit cards and EFTS -Bank service fees +/- company errors Balance After reconciliation Balance After reconciliation Bank Account (Statement) Company Cash Account (Ledger) |+/- items that are recorded in the Company +/- items that are recorded on the Bank |Cash account (ledger) but HAVE NOT been Statement but HAVE NOT been recorded in the recorded on the Bank statement. Examples: |- outstanding checks + outstanding deposits (deposits in transit) Company Cash account (ledger). For example: |+Notes received/collected by bank +Interest received |-NSF checks |-unrecorded debit cards and EFTS |-Bank service fees Fix errors where they exist Fix errors where they exist The goal is to get both to be the same (by including everything); they both represent the Company's bank account. After the bank reconciliation is completed, make sure to record the changes made to the cash account.
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Bank Reconciliation: It is a statement where the balance as per the cash book gets reconciled with the bank statement for the required period. To match this difference adjustment entries have to pass. this statement is a part of the financial report.

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