Bank Reconciliation – MCQ

Practice Question

Intro to Financial Accounting
Sales Revenue, Receivables, and Cash Management
Bank Reconciliation
MCQs

Which of the following statements about bank reconciliation is true?

  1. Bank reconciliation is only necessary at year-end.
  2. Bank reconciliation adjusts the bank’s records to match the company’s records.
  3. Bank reconciliation identifies discrepancies between the company’s and bank’s records due to timing differences or errors.
  4. Bank reconciliation increases the company’s cash balance.
Answer +
Correct Answer: C
Explanation +

Bank reconciliation is the process of comparing the company’s accounting records for cash with the bank statement. This process helps identify differences caused by timing, errors, bank fees, or deposits in transit.

Conducting reconciliations monthly ensures that the company’s cash records are accurate, which is critical for financial reporting and cash management.