The auditors test the client's monthly bank reconciliation to verify whether the client's recorded bank balance is the same amount as the actual cash in the bank. Which of the following would not explain a difference between the company's cash balance and the bank's balance for the client?
A) deposits in transit
B) Checks are written by the client in the same month the checks clear the bank.
C) other reconciling items
D) outstanding checks

Question

Quizplus · Accepted Answer

Checks written by the client in the same month the checks clear the bank would not explain a difference between the company's cash balance and the bank's balance, as this is a normal occurrence and should be reflected in the bank reconciliation. The other three options (deposits in transit, outstanding checks, other reconciling items) could all cause differences between the two balances and would need to be accounted for in the bank reconciliation.

The Auditors Test the Client's Monthly Bank Reconciliation to Verify