Which of the following would be added to the book balance on a bank reconciliation?

(d) bank service charges71. On a bank reconciliation, which of the following would be deducted from the balance perbank?(a) outstanding cheques(b) deposits in transit(c) electronic payment by a customer on account(d) bank service charges72. On a bank reconciliation, which of the following would be added to the balance per bank?(a) outstanding cheques(b) deposits in transit(c) electronic payment by a customer on account(d) bank service charges73. A cheque in the amount of $425 was returned by the bank marked "NSF". A bank service feeof $20 was charged for processing the returned cheque. Upon notification of the NSF, thecompany who initially received the customer’s cheque will most likely(a) reverse the customer’s payment on their books to re-establish the accounts receivable for$425.(b) make no changes to the accounting records but advise the customer that the payment wasdeclined and is still outstanding.(c) reverse the customer’s payment on their books to re-establish the accounts receivable for$425 and debit bank charges expense for the bank service fee of $20.(d) reverse the customer’s payment on their books to re-establish the accounts receivable for$425 and debit the accounts receivable for the bank service fee of $20.74. Outstanding cheques from the prior period which clear the bank in the current period(a) should be added to the balance per books.(b) should be deducted from the balance per books.(c) should be deducted from the balance per bank.(d) do not affect the current period’s bank reconciliation.75. In preparing a bank reconciliation, outstanding cheques are(a) added to the balance per bank.(b) deducted from the balance per books.(c) added to the balance per books.(d) deducted from the balance per bank.76. If a cheque correctly written and paid by the bank for $483 is incorrectly recorded on thecompany's books for $384, the appropriate treatment on the bank reconciliation would be to(a) add $99 to the balance per bank.(b) add $99 to the balance per books.(c) deduct $99 from the balance per books.(d) deduct $99 from the balance per bank.

What is a Book Balance?

A book balance is the account balance in a company's accounting records. The term is most commonly applied to the balance in a firm's checking account at the end of an accounting period. An organization uses the bank reconciliation procedure to compare its book balance to the ending cash balance in the bank statement provided to it by the company's bank.

Bank and Book Balance Differences

The bank and book balances are almost never the same, which most commonly calls for the adjustment of the book balance to conform to the information in the bank statement. The following reconciling items commonly arise as part of a bank reconciliation, and require adjustment of the book balance:

Interest Earned

The amount of interest earned is recorded in the bank statement, and must be added to the company's book balance.

Service Charges

Service charges are charged by the bank for its services in maintaining the checking account, and must be subtracted from the company's book balance. This may also include a fee for supplying check stock to the company.

Adjustments to Deposits

The company may sometimes record a deposit incorrectly, or it may deposit a check for which there are not sufficient funds (NSF). If so, and the bank spots the error, the company must adjust its book balance to correct the error. The bank may also charge an NSF fee, which must be recorded in the company’s books.

Adjustments to Checks

The company may occasionally record a check incorrectly. If so, and the bank spots the error, the company must adjust its book balance to correct the error.

Bank Errors

On rare occasions, the bank will have made an error instead, in which case the bank corrects its records and the company's book balance is not adjusted.

For many students, bank reconciliations are a difficult topic because most people don’t do them anymore. Twenty years ago, before debit cards and online banking, there was only one way to keep track of how much money you had in the bank: keep a checkbook and reconcile it.

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• What is a bank reconciliation?
• What are we looking for?
• How to start
• Which of the following would be added to the balance per company's records on a bank reconciliation?
• Which of the following would be added to the balance per bank on a bank reconciliation quizlet?
• What is added to the bank balance in a bank reconciliation?
• Which of the following would be subtracted from the balance per bank on a bank reconciliation group of answer choices?

Clearly, online banking has not made us better at managing our bank accounts. In 2012, U.S. consumers paid $32 billion in overdraft fees. That’s approximately $135 per adult in the United States! Maybe we should consider going back to writing down all our transactions and balancing our checkbooks!

What is a bank reconciliation?

A bank reconciliation is a monthly process by which we match up the activity on the bank statement to ensure that everything has been recorded in the company’s or individual’s books. As we all engage in more automatic and electronic transactions, this is a critically important step to ensure that the cash balance is correct.

There are two parts to a bank reconciliation, the book (company) side and the bank side. When the reconciliation is completed, both balances should match.

What are we looking for?

There are a number of items that can cause differences between your book and bank balances. Here is a list of the most common items you’ll encounter when doing a bank reconciliation:

1. Deposits in Transit – A deposit in transit is a deposit that has been submitted to the bank but has not get been recorded by the bank. The account holder has recorded the deposit in his records but the bank has not. This occurs because a deposit was submitted after the bank closed for the day or because of lag in electronic deposits. We see this a lot with credit card deposits because there is typically a 1-3 day lag in the time the card is processed and when the funds are deposited to the merchant’s account. Deposits in Transit must be added to the bank side of the reconciliation because they have been added to the book side when the deposits were recorded by the company.
2. Outstanding Checks – These are checks that have been written by the company but have not yet cleared the bank. When a check is written it takes a few days to clear. Most businesses have a number of outstanding checks at the end of the month. Outstanding Checks should be subtracted from the bank side of the reconciliation because they were subtracted from the book balance when the checks were written.
3. Bank Service Charges – These are amounts that the bank withdraws from the account as a charge for having the account. Bank service charges include regular monthly fees, overdraft fees, returned check fees and credit card processing fees. Typically, the company does not record these fees until the bank statement is received. Bank service charges are subtracted from the book balance since they are a decrease in the account balance and have not yet been recorded.
4. Interest Earned – Some banks pay interest on account. The account holder does not know how much the interest will be until the bank statement is received. Interest earned is deposited into the account by the bank causing the balance to increase. Interest earned is added to the book balance to reflect the increase in the balance from the deposit of interest.
5. Returned Checks – A returned check is an item that was originally deposited into the company’s account (usually a customer check) and later bounced. When this happens the bank withdraws the funds from the company’s account and sends a notice to the company. Returned checks should be subtracted from the book balance since the bank removed the amount from the balance when the check bounced.
6. Recording Errors – A recording error occurs when the company incorrectly records a transaction or when the bank clears an item for the incorrect amount. This sometimes occurs when checks are written and an incorrect amount is entered into the system. Sometimes the bank clears the transaction for the wrong amount. Say the company wrote a check for $452.00 but the bank cleared the check for $450.00. There is now a $2 error in the books. Since the bank has cleaned the transaction, you must adjust the books to match. Recording errors should be added or subtracted from the book balance. If the item cleared the bank for less than the amount in the books, add the amount of the error. If the item cleared the bank for more than the amount in the books, subtract the amount of the error.
7. Other Unrecorded Items – With the number of transactions that occur digitally or automatically, it’s easy to forget to record transactions, especially if they occur infrequently. Look for remaining items that cleared the bank that have not been recorded on the books. Other unrecorded items can be either deposits or withdrawals. All other unrecorded items should be recorded on the book side of the reconciliation. To determine if you should add or subtract the item, mimic what the bank did. If the bank added it to the account balance, do the same to the book balance. 

How to start

To do a bank reconciliation, you’ll need a copy of the bank statement and a copy of all of the outstanding items in the checking account through the ending date of the bank statement. For some businesses, including my own, the bank statement does not close at the end of the month. Sometimes the statement end date is based on the date the account was opened.

Once you have those two items, use a pencil or highlighter to mark off all the items that appear on both the bank statement and the check register. If an item appears on both, that means that the item was properly recorded and has cleared. After going through all the items, anything that remains unmarked is a an item that will need to be dealt with in the reconciliation.

Create two columns on a piece of paper or use a spreadsheet to do the calculations for you. My bank reconciliations look like a large T-account.

Start by writing the ending balance for the book and the bank under the appropriate column.

I like to do the bank side first because it is generally easier than the book side. You are only dealing with outstanding checks and deposits in transit on the bank side. List the deposits in transit and the outstanding checks. Add the deposits in transit to the beginning balance and subtract the outstanding checks.

The bank side is relatively easy to do. That is why I like to do that side first. It is more likely to be correct if you have an error in your reconciliation. Most students who have errors have them on the book side. Being confident in the bank side helps resolve errors on the book side.

On the book side, most items are fairly simple. Subtract bank service charges and add interest income. Subtract returned checks. Add unrecorded deposits and subtract unrecorded withdrawals. The last item, recording errors, requires a bit more thinking.

Let’s imagine that you recorded a check for $715, but the bank cleared that check for $751. The check was used to pay for utilities and was recorded to utilities expense for $715. If the check cleared for $751, what happened to your utilities expense? Did it increase or decrease? It increased because more was paid for utilities. If the expense increased, cash must have decreased. Therefore, cash must be adjusted down or decreased by $36. This would be subtracted from book side of the reconciliation.

Thinking about what is happening to your expenses can help you work your way through the problem.

Once you have worked through all the remaining items on the book side, compute the reconciled balance for the books.

When you are finished, the reconciled balances should agree.

If they do not, take the difference between the two balances. Does that amount stick out in your mind. Check to see if there is a missing item for that amount that you might have forgotten to record. You may have forgotten multiple items. Place them in the reconciliation and see if you now balance.

If you do not have an item for that amount, take the difference and divide it by 2. Look for that amount. If that amount appears in your reconciliation, you added (or subtracted) the amount when you should have subtracted (or added) the amount. Reverse the sign and check your balance again.

Once you finish the bank reconciliation, there is one more step in the process. All the items that you recorded on the book side of the reconciliation must be recorded in the company’s accounting system. Prepare a journal entry (or several) to record those items. I usually record one large journal entry but you can also record a separate entry for each item in the reconciliation. Only record items on the book side!

Bank reconciliations become easier as you do more of them. Get all the practice you can. Here is the bank reconciliation problem I created for the video on this subject. You are provided with the check register and the bank statement. See if you can complete the reconciliation before watching the video.

Related Videos:

How to do a bank reconciliation

Journal entries for the bank reconciliation

Which of the following would be added to the balance per company's records on a bank reconciliation?

The items that are added to the balance per bank when doing a bank reconciliation include: Deposits in transit which include the cash and checks that were received by a company as of the date of the bank statement, but were not deposited in time for them to appear on the bank statement.

Which of the following would be added to the balance per bank on a bank reconciliation quizlet?

On a bank reconciliation, outstanding checks are added to the balance per books to obtain the adjusted balance per books. The three main factors (the fraud triangle) that contribute to fraudulent activity are: Opportunity, Financial Pressure and Rationalization.

What is added to the bank balance in a bank reconciliation?

Bank Reconciliation Process Flow The essential process flow for a bank reconciliation is to start with the bank's ending cash balance, add to it any deposits in transit from the company to the bank, subtract any checks that have not yet cleared the bank, and either add or deduct any other items.

Which of the following would be subtracted from the balance per bank on a bank reconciliation group of answer choices?

The correct answer is d. To reconcile cash balances per book and bank, the amount of bank service charge must be deducted from the balance. Deposits in transit are added to the balance per bank. Outstanding checks are deducted from the balance per bank. Notes collected by the bank are added to the balance per books.

Which of the following would be added to the balance per books on a bank reconciliation outstanding checks deposits in transit notes collected by the bank NSF check?

Which of the following would be added to the balance per books on a bank reconciliation outstanding checks deposits in transit service charges notes collected by the bank?

What should be added to book balance?

What do you add to a bank reconciliation?