In Preparing a Bank Reconciliation Statement for a Business with a Substantial

question 7

Multiple Choice

In preparing a bank reconciliation statement for a business with a substantial bank balance, the appropriate treatment for a $450 cheque outstanding at end of month is to:

• A) add it to the balance as per bank statement.
• B) deduct it from the balance as per bank statement.
• C) add it to the balance per company records.
• D) deduct it from the balance per company records.

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Definitions:

Central Bank

The principal monetary authority of a country, which manages the country's currency, money supply, and interest rates.

Flexible Exchange Rates

Exchange rates determined by the foreign exchange market, allowing the value of a currency to fluctuate according to supply and demand.

Bretton Woods Agreement

A 1944 agreement that established a new international monetary system, creating institutions like the International Monetary Fund (IMF) and the World Bank to ensure financial stability and promote economic cooperation.

Gold Standard

An economic setup where the worth of paper money or a country's currency is directly connected to the value of gold.