Bank Reconciliation Multiple Choice Questions

What is the primary purpose of a bank reconciliation statement?

• To calculate monthly interest on savings

• To compare the cash book with the bank statement

• To record daily business transactions

• To prepare the trial balance

Which document is required to prepare a bank reconciliation statement?

• Income statement

• Trial balance

• Bank statement

• Purchase order

Which of the following is commonly considered a reconciling item in a bank reconciliation statement?

• Sales revenue

• Outstanding checks

• Owner’s equity

• Inventory purchases

What is the first step in preparing a bank reconciliation statement?

• Adjust the cash book for errors

• Compare the cash book balance with the bank statement balance

• Record outstanding checks

• Add interest income to the bank statement

Why is it important for a business to prepare a bank reconciliation statement regularly?

• To increase the company’s revenue

• To ensure the bank earns interest

• To identify and correct differences between the cash book and bank statement

• To avoid issuing checks to suppliers

Why should a business record outstanding checks when preparing a bank reconciliation statement?

• To increase the bank’s balance

• To ensure the cash book matches the bank statement

• To avoid paying service charges

• To reduce the company’s revenue

Why is it necessary to adjust the cash book before finalizing a bank reconciliation statement?

• To match the bank’s balance with the company’s inventory

• To ensure all bank transactions are recorded in the company’s books

• To calculate the company’s net income

• To close the accounting period

A business receives its bank statement showing a service charge of ₱200 that was not recorded in the cash book. What should the accountant do to reconcile this item?

• Add ₱200 to the bank statement balance

• Deduct ₱200 from the cash book balance

• Ignore the ₱200 since it’s a small amount

• Add ₱200 to the cash book balance

You are preparing a bank reconciliation statement and notice a check issued for ₱5,000 has not yet cleared the bank. How should this be treated?

• Add ₱5,000 to the cash book balance

• Deduct ₱5,000 from the cash book balance

• Deduct ₱5,000 from the bank statement balance

• Add ₱5,000 to the bank statement balance

How should a business record a bank service charge of ₱150 that appears on the bank statement but is not yet recorded in the cash book?

• Add ₱150 to the bank statement balance

• Deduct ₱150 from the cash book balance

• Add ₱150 to the cash book balance

• Ignore the charge since it’s already in the bank statement