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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

The current month’s bank statement for your account arrives in the mail. In reviewing the statement, you notice a deposit listed for $400 that you did not make. It has been credited in error to your account.

Discuss whether you have an ethical or legal obligation to inform the bank of the error. What action should you take?

To determine

State whether it is an ethical or legal obligation to inform the bank about the error and also specify the action that must be taken.

Explanation

Bank reconciliation:

Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

In the given situation the bank has made it in its bank statement an error by depositing an amount of $400 in the account...

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