A bank reconciliation adjusts both the cash balance reported by the bank and the book cash balance to the true cash balance.

Question

Quizplus · Accepted Answer

A bank reconciliation is used to compare the cash balance reported by the bank to the cash balance recorded in a company's accounting records (book balance). Differences can occur due to timing differences in when transactions are recorded by the bank versus the company, errors, or fraud. The purpose of the reconciliation is to identify these differences and adjust both balances to the true cash balance. Therefore, the statement "A bank reconciliation adjusts both the cash balance reported by the bank and the book cash balance to the true cash balance" is true.

A Bank Reconciliation Adjusts Both the Cash Balance Reported by the Bank