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.

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ekkarill92 answered 1 year ago

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