Differences Between the Amount of Cash Reported on a Company's

question 119

Multiple Choice

Differences between the amount of cash reported on a company's bank statement and the balance in the company's Cash account before the bank reconciliation are primarily due to:

• A)errors in the accounting process by the company.
• B)errors made by the bank.
• C)differences between the cash basis and accrual basis of accounting.
• D)the timing difference in recording transactions.

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Definitions:

Divestiture

The opposite of an acquisition. That is, a company sells a portion of its assets, often a whole division, to another firm or individual.

Market Value

The current price at which an asset or service can be bought or sold in the marketplace, reflecting the value as perceived by the market participants.

Acquiring Firm

This is a company that purchases most or all of another company's shares to gain control over that company.

Replacement Cost

The cost to replace an asset of a company at its current price, without considering depreciation.