Question

Bank reconciliation sometimes points to the need for adjusting entries. Invariably how should it be done?

• A. The reconciliation of the ending balance per the bank statement to the adjusted cash balance.
• B. The reconciliation of the cash balance per the company records to the adjusted cash balance.
• C. Both a and b
• D. None of the above.

Answer 1

The correct option is A The reconciliation of the ending balance per the bank statement to the adjusted cash balance.

Bank statement provided by the bank shows the balance as on date.Hence, bank column of cash book might not reflect all the entries as shown in bank pass book since some entries only reflect in bank pass book.Adjustments are made in business's cash book to arrive at the final balance available with the business.