Question

In: Accounting

True or False. All items shown on the bank reconciliation as adjustments of the book (ledger)...

True or False.

All items shown on the bank reconciliation as adjustments of the book (ledger) balance require journal entries to adjust the Cash account, whereas items appearing as adjustments to the balance per bank statement do not require entries by the depositor.

Answer should be: FALSE

Please explain

Solutions

Expert Solution

No, the answer should be TRUE

explanation:

Item shown on thr bank reconciliation as adjustment of book balance require journal entries to adjust cash account because these are the items that appears on the bank statement but are not recorded in the company's books. So a journal entry is made to adjust cash account to reconcile them.

For example,in case of bank service charge. The bank service charge is often shown on the last day of the bank statement. Since it is on the bank statement, but not yet on the company's books, you will need to credit Cash and to debit an expense such as Bank Charges or Miscellaneous Expense through a journal entry.

Where as in adjustment of the balance as per bank statement we are adjusting bank balance through our book balance which does not require any change in the book balance and hence no entry is required.

For any query please comment and dont forget to give a thumbs up.


Related Solutions

What was the cash balance on the Egrane's books (before the adjustments for items on the bank reconciliation)?
Egrane, Incorporated's monthly bank statement showed the ending balance of cash of $20,400. The bank reconciliation for the period showed an adjustment for a deposit in transit of $2,450, outstanding checks of $3,900, an NSF check of $2,600, bank service charges of $125 and the EFT from a customer in payment of the customer's account of $3,400. What was the cash balance on the Egrane's books (before the adjustments for items on the bank reconciliation)? Multiple Choice$18,275$24,825$18,950$21,850
Classifying bank reconciliation items The following items could appear on a bank reconciliation:
Question Classifying bank reconciliation items The following items could appear on a bank reconciliation:a. Outstanding checks, $670.b. Deposits in transit, $1,500.c. NSF check from customer, no. 548, for $175.d. Bank collection of note receivable of $800, and interest of $80.e. Interest earned on bank balance, $20.f. Service charge, $10.g. The business credited Cash for $200. The correct amount was $2,000.h. The bank incorrectly decreased the business’s account by $350 for a check written by another business.Classify each item as (1)...
Items on a Bank Reconciliation Assume that a company is preparing a bank reconciliation for the...
Items on a Bank Reconciliation Assume that a company is preparing a bank reconciliation for the month of June. It reconciles the bank balance and the book balance to the correct balance. For each of the following items, indicate whether the item is an addition to the bank balance, an addition to the book balance, a deduction from the bank balance, a deduction from the book balance, or would not appear on the June reconciliation. Also, choose Yes or No...
The bank reconciliation is an important part of the system of internal controls. True or False?  
The bank reconciliation is an important part of the system of internal controls. True or False?  
Problem 7-11 A Preparing a bank reconciliation and recording adjustments CHECK FIGURE: 1. Adjusted book balance...
Problem 7-11 A Preparing a bank reconciliation and recording adjustments CHECK FIGURE: 1. Adjusted book balance = $28,250 The following is information for Dundee Reality: Balance per the bank statement dated October 31, 2020, is $26,830. The balance of the Cash account on the company books as of October 31, 2020, is $5,575. $14,680 of customer deposits were outstanding as of September 30; this amount has been deposited to Dundee’s account in October. Cheques written in October that had not...
how to make general ledger, bank reconciliation
how to make general ledger, bank reconciliation
Briefly explain the importance of preparing Bank Reconciliation Statement and analyze the adjustments and the treatment...
Briefly explain the importance of preparing Bank Reconciliation Statement and analyze the adjustments and the treatment of the adjustments that needs to be considered under bank statement and cash book statement. You can access online resources to get the required information while maintaining APA referencing guidance [ 5 marks] [ minimum 500 words].
What is deducted from the balance per book on a bank reconciliation?
What is deducted from the balance per book on a bank reconciliation?
True or False. Explain. "In forecasting the income statement, it is recommended to tie all items...
True or False. Explain. "In forecasting the income statement, it is recommended to tie all items directly to revenue."
Give at least two examples of adjustments to the bank balance and the book balance.
Question In 100 words or fewer, explain why there may be a difference between the bank statement ending cash balance and the ending balance in the Cash account. Give at least two examples of adjustments to the bank balance and the book balance
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT