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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

Which of these is added to the ending bank statement balance?

  1. (a) Outstanding checks
  2. (b) Service charges
  3. (c) Checkbook errors
  4. (d) Deposits in transit

To determine

Identify the option that can be added to the ending bank statement balance.

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.

Justification for the incorrect answer:

Option a:

Outstanding checks are the checks that are issued by the depositor but not presented to the bank for payment before the statement is prepared this will lead to increase in the bank balance of the company. This outstanding check will be deducted from the ending balance as per bank. Therefore, Option a is an incorrect answer.

Option b:

Service charges are the charges made by the bank for the services provided by them like check printing and check processing. The service charges are not recorded by the bank in the ending balance as per bank...

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