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

question 5

Multiple Choice

In preparing a bank reconciliation statement for a business with a substantial bank balance, the appropriate treatment for a deposit for $2 300 not appearing on the bank statement 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:

Minimum Cash Balance

The least amount of cash a company needs on hand to meet its immediate operational expenses and financial obligations.

Current Ratio

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over its current liabilities.

Restrictive Policy

A restrictive policy refers to a set of rules or regulations designed to limit or control certain activities or behaviors, often implemented to ensure safety, security, or compliance with legal standards.

Flexible Policy

A strategy or guideline that allows for adaptability and changes depending on circumstances or conditions.