Multiple Choice: Bank Reconciliations Select the best answer for each of the following:
1. Bank reconciliations are needed to:

a. Be sure that all cash receipts are being used efficiently.

b. Assist in determining if cash projections have been correct.

c. Be sure products are not being sold below cost.

d. Identify differences between the cash balances reported by the company and its bank.
2. An adjustment to a company’s reported cash balance is needed if:

a. Its bank has incorrectly recorded a check.

b. A check has been written that has not yet been received by its bank.

c. A notice of a bank service charge is received with its bank statement.

d. There was a deposit in transit at the end of the period.
3. The cash balance your company reports should be increased if in doing the bank reconciliation you discover:

a. A note receivable has been collected for you by the bank.

b. Not all of the checks written this period have yet cleared the bank.

c. A check from one of your customers has been returned for insufficient funds.

d. A deposit in transit included in your bank reconciliation last period is shown by the bank as received at the beginning of this period.
4. When preparing a bank reconciliation, which of the following must be done to arrive at the correct cash balance?

a. Checks outstanding must be deducted from the balance reported by the company.

b. Deposits in transit must be deducted from the balance reported by the bank.

c. Checks outstanding must be added to the balance reported by the bank.

d. Deposits in transit must be added to the balance reported by the bank.