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Bank Reconciliation

At the end of each calendar month, banks typically send their customers a bank statement, a summary of all the transactions that occured in their account throughout the month, as well as a beginning balance and an ending balance typically after each transaction. Banks also provide a copy of each cheque that was written and withdrawn from the account during the month. 

After receiving a bank statement, a company typically prepares a bank reconciliation. A bank reconciliation is a schedule that explains any differences between the bank's and the companys records of cash. These differences are referred to as reconciling items. If the difference results only from transactions not yet recorded by the bank, the company's record of cash is considered to be correct. However, if there still a difference, the company's or the bank's records may need to be adjuster. As a result, the bank reconciliation is a good tool to use as an internal control. 

There are two forms of bank reconciliation. One form reconciles from the bank statement balance to the book balance or vice versa. The other form reconciles both the bank balance and the book balance to a correct cash balance. This latter form is more popular: 


Adjusting journal entries are prepared for all the addition and deduction items the appear in the 'Balance per company's books' section of the bank reconciliation on the bank reconciliation done at the end of the period. 

Non Sufficient Funds Checks

Non sufficient funds (NSF) checks would be: - subtracted from the book balance of a bank reconciliation. - subtracted from the bank balance of a bank reconciliation. - added to the bank balance of a bank reconciliation. - added to the book balance of a bank reconciliation.

How does an EFT Payment for a Bill Work?

An electronic fund transfer (EFT) for payment of a bill would be: a) subtracted from the bank balance of a bank reconciliation. b) added to the book balance of a bank reconciliation. c) added to the bank balance of a bank reconciliation. d) subtracted from the book balance of a bank reconciliation.

Identifying internal control deficiencies

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External Auditing Questions

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Evaluating Design and Effectiveness of Internal Controls

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LJB Company: Evaluate the system of internal controls

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Trex Co. Balance of Cash Accounts

Please find attached the XCEL file containing the questions. The following information is available for Trex Co.: a) Balance per the bank staement dated March 31, 2007, is $32,950. b) Balance of the Cash account on the company books as of March 31, 2007 is $31,396 c) Included with the bank statement was a $

Internal Controls at The Beat Company

E8-5 Listed below are five procedures followed by The Beat Company. 1. Several individuals operate the cash register using the same register drawer. 2. A monthly bank reconciliation is prepared by someone who has no other cash responsibilities. 3. Ellen May writes checks and also records cash payment journal entries. 4. On

Bank Reconciliation for

Prepare a bank reconciliation using the following information: Bank Statement Date Checks Deposits Balance 7/1 Balance $4,500.75 7/18 $133.50 4,367.25 7/19


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Identify internal controls

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Internal Controls of Ernesto's Pizza (Culotti's Pizza)

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Proper implementations of reconciliation controls

Proper implementations of reconciliation controls would be effective in detecting all of the following errors except: a. Transactions were appropriately posted to individual subsidiary accounts, but because of a computer malfunction, some of the transactions were not posted to the master account. b. The client has experience