Steps in a Bank Reconciliation - Accounting

The video tutorial explains the bank reconciliation process, focusing on the bank and book sides. It covers unadjusted balances, deposits in transit, outstanding checks, accounts receivable collections, interest earned, bank fees, and non-sufficient funds (NSF) checks. The tutorial emphasizes the importance of matching the bank and book sides to find the true cash balance and discusses the need for adjusting journal entries on the book side.

What are the two sides involved in a bank reconciliation?

• Bank side and cash side

• Bank side and book side

• Cash side and ledger side

• Ledger side and book side

How does a deposit in transit affect the bank and book balances?

• Increases both balances

• Decreases book balance but not bank balance

• Decreases both balances

• Increases book balance but not bank balance

What should be done to the bank side to match the book side when there are outstanding checks?

• Multiply outstanding checks

• Add outstanding checks

• Subtract outstanding checks

• Ignore outstanding checks

When the bank collects accounts receivable for a company, what is the impact on the book balance?

• It increases the book balance

• It decreases the book balance

• It has no effect on the book balance

• It decreases the bank balance

How does interest earned affect the bank and book balances?

• Increases both balances

• Decreases both balances

• Increases bank balance but not book balance

• Decreases bank balance but not book balance

What action is required on the book side for bank service fees?

• Subtract bank service fees

• Multiply bank service fees

• Add bank service fees

• Ignore bank service fees

What should be done to correct a non-sufficient funds (NSF) check on the book side?

• Subtract the NSF check amount

• Add the NSF check amount

• Ignore the NSF check

• Multiply the NSF check amount