Why Are Bank Reconciliations a Good Internal Control

question 12

Multiple Choice

Why are bank reconciliations a good internal control?

• A)Bank reconciliations allow the company to update the Cash account to equal the bank balance.
• B)Bank reconciliations compare actual assets existing at the bank with accounting records.
• C)Bank reconciliations allow the bank to update its cash to agree to the company's accounting records.
• D)Bank reconciliations are not part of the internal control system.

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Definitions:

Raw Materials

The basic materials that are used in the production process of goods, prior to being processed or transformed.

Direct Labor Budget

A detailed plan that shows the amount of direct labor hours required to meet production needs and the associated costs.

Direct Labor-Hours

Hours attributed to workers who are directly involved in the creation or assembly of a company's products.

Budgeted Production

The planned level of production output, determined as part of a company's budgeting process to meet expected demand and inventory requirements.