Question

Question 1 In preparing a bank reconciliation statement for a business with a substantial bank balance, the appropriate treatment for a $8 100 dividend on shares, deposited directly into the bank account, appearing on the bank statement is to: A. add it to the balance as per bank statement. B. deduct it from the balance as per bank statement. c. add it to the balance per company records. D. deduct it from the balance per company records. Question 2 In preparing a bank reconciliation statement for a business with a substantial bank balance, the appropriate treatment for $870 from a debtor paid directly into the company's bank account is to: A. add it to the balance as per bank statement. B. deduct it from the balance as per bank statement. C. add it to the balance per company records. D. deduct it from the balance per company records. Question 3 In preparing a bank reconciliation statement for a business with a substantial bank balance, the appropriate treatment for a cheque for $871 in payment of an account payable that was erroneously entered as $817 in the company's books is to: A. add it to the balance as per bank statement. B. deduct it from the balance as per bank statement. C. add it to the balance per company records. D. deduct it from the balance per company records. Question 4 In preparing a bank reconciliation statement for a business with a substantial bank balance, the appropriate treatment for $240 in interest earned on the account is to: A add it to the balance as per bank statement. B. deduct it from the balance as per bank statement. C add it to the balance per company records. D. deduct it from the balance per company records. Question 5 In preparing a bank reconciliation statement for a business with a substantial bank balance, the appropriate treatment for a deposit for $2 300 not appearing on the bank statement is to: A. add it to the balance as per bank statement. B. deduct it from the balance as per bank statement. C add it to the balance per company records. D. deduct it from the balance per company records.

Answer 1

Let us first understand the purpose of the Bank Reconciliation

A bank reconciliation is prepared to reconcile the Balance in the company's Bank Accounts as per the company's records and as per the Bank's record

Question 1

If an amount is deposited into Bank directly it increases the balance. So the balance as per Bank records is more than Balance as per company's records. In order to reconcile the balances we will need to increase the book balance as well.

So we need to add it to the balance as per company records to increase the book balance.

Question 2

If an amount is deposited into Bank directly it increases the balance. So the balance as per Bank records is more than Balance as per company's records. In order to reconcile the balances we will need to increase the book balance as well.

So we need to add it to the balance as per company records to increase the book balance.

Question 3

The payment amount was $ 871. But the company recorded it as $ 817. The company recorded it less whereas the actual payment was more. The bank records would be showing a lower balance due to this. In order to reconcile the balance, we will need to reduce the book balance.

Correct answer is Option D

Question 4

If an amount is deposited into Bank directly it increases the balance. So the balance as per Bank records is more than Balance as per company's records. In order to reconcile the balances we will need to increase the book balance as well.

So we need to add it to the balance as per company records to increase the book balance.

Question 5

A deposit that has been sent by the company to the bank and not appearing in the bank statement means that the deposit is still in transit. In order to reconcile the same, the amount must be deducted from balance as per company's records since it is higher.

Correct answer is Option D