AFC AFC Bank Reconciliation 2

Question 1

A check for $540 was correctly recorded by the bank but entered in the company's books as $450. In the bank reconciliation, this error is:

Accepted Answer

Deducted $90 from the book balance

Answer

The company understated the check by $90 ($540 − $450), so the book balance must be reduced by $90 to correct the error.

Question 2

An NSF (non-sufficient funds) check returned by the bank means:

Accepted Answer

The customer's check bounced and cash must be reduced on the company's books

Answer

An NSF check was dishonored by the customer's bank; the company must reverse the original deposit entry, reducing cash and reinstating the receivable.

Question 3

Which of the following items would appear on the bank side of the reconciliation (not the book side)?

Accepted Answer

Outstanding checks

Answer

Outstanding checks are checks the company has written and recorded, but the bank has not yet processed, so they appear as adjustments to the bank balance.

Question 4

A note receivable collected by the bank on the company's behalf for $1,000 plus $50 interest has not been recorded in the company's books. What is the correct adjustment?

Accepted Answer

Add $1,050 to the book balance

Answer

The bank collected $1,050 for the company; since the company hasn't recorded it yet, add $1,050 to the book balance and record the journal entry.

Question 5

After all reconciling items are applied, the adjusted bank balance and adjusted book balance should:

Accepted Answer

Both equal the same reconciled cash balance

Answer

A properly completed bank reconciliation results in both adjusted balances agreeing to the same correct cash balance.

AFC - Accounting Fundamentals Certification Practice Test

AFC - Accounting Fundamentals Certification Practice Test

AFC AFC Bank Reconciliation 2