Question

In preparing a monthly bank reconciliation, a business follows several steps. Place the selected steps below in the correct order of occurrence.

Answer 1

The correct order to reconcile a monthly bank statement is:

• 1. Identify the bank statment balance then add any deposits in transit and subtract any outstanding checks.
• 2. Compute the adjusted bank balance.
• 3. Identify the company's book balance.
• 4. Add any unrecorded credit memoranda from the bank, interest earned, and errors understating the book balance.
• 5. Identify and list any unrecorded debit memoranda form the bank, service charges, and errors overstating the book balance.
• 6. Compute the adjusted book balance and compare it to the adjusted bank balace to verify equality.

What is a Bank Statement?

This refers to the financial record that contains the transactions in a bank account over a period of time.

Hence, we can see that a business owner must follow different steps when preparing a monthly bank reconciliation and they are shown above.

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