Bank Reconciliation Quiz
Bank Reconciliation Quiz: 20 Practice Questions for Beginners
How well do you know the Bank Reconciliation? See if you can answer these 20 quiz questions.
Bank Reconciliation Practice Quiz.
Here are twenty multiple-choice questions on the Bank Reconciliation. Grab a pen, play along, and don’t forget to share your score in the comments.
Which two records are compared in a Bank Reconciliation?
a) Bank Statement and Sales Ledger
b) Bank Statement and Balance Sheet
c) Cash Book and General Ledger
d) Cash Book and Bank Statement
The Cash Book is prepared by ______. Can you fill in the blank?
a) The bank
b) The business
The Bank Statement is prepared by ______. Can you fill in the blank?
a) The bank
b) The business
The Bank Reconciliation is prepared by ______. Can you fill in the blank?
a) The bank
b) The business
What is the purpose of a Bank Reconciliation?
a) To approve payments made by the bank
b) To calculate interest earned on bank balances
c) To ensure the Cash Book agrees with the Bank Statement
d) To confirm all customer invoices have been paid
It’s best practice to perform a Bank Reconciliation ______. Can you fill in the blank?
a) Once a year
b) Once a quarter
c) At least once per month
d) Only when discrepancies arise
Differences between the Cash Book and the Bank Statement are explained by ______. Can you fill in the blank?
a) Reconciling items
b) Outstanding balances
c) Internal controls
d) Adjusting entries
When a transaction is “matched” in a Bank Reconciliation, it ______. Can you fill in the blank?
a) Only appears in the Cash Book
b) Only appears in the Bank Statement
c) Appears in both the Cash Book and the Bank Statement
d) Requires an adjusting journal entry
In a Bank Reconciliation, matched transactions ______. Can you fill in the blank?
a) Are adjusted in the Cash Book
b) Are adjusted in the Bank Statement
c) Are listed as reconciling items
d) Require no further action
What can cause differences between the Cash Book and the Bank Statement?
a) Timing delays
b) Depreciation expenses
c) Inventory write-downs
d) Accrued wages
Which of the following is a common example of a timing difference?
a) Prepaid insurance
b) Deposit in transit
c) Unearned revenue
d) Bad debt expense
An outstanding check is a check that ______. Can you fill in the blank?
a) Has bounced
b) Has not yet been written
c) Has been issued but not yet cleared by the bank
d) Has been received from a customer
What is an omission in a Bank Reconciliation?
a) A timing difference
b) A transaction missing from one record
c) An error in amount
d) A matched transaction
Which of the following is a common example of an omission?
a) Outstanding check
b) Deposit in transit
c) A check recorded in both records
d) A bank fee not recorded in the Cash Book
An NSF check occurs when ______. Can you fill in the blank?
a) A check is deposited late
b) A check has been written but not yet cleared
c) A bank fee is charged
d) A customer’s check is returned unpaid by the bank
Omissions in a Bank Reconciliation usually require ______. Can you fill in the blank?
a) No action
b) Adjustments to the Bank Statement
c) Journal Entries
d) Removal from the reconciliation
Interest earned appears on the Bank Statement but was omitted from the Cash Book. What Journal Entry is required?
a) Debit Interest Income, Credit Cash
b) Debit Cash, Credit Interest Income
c) Debit Cash, Credit Accounts Receivable
d) Debit Revenue, Credit Bank
A check recorded as $720 in the Cash Book was recorded by the bank as $270. This is an example of ______. Can you fill in the blank?
a) A bank error
b) A cash error
c) A timing difference
d) An outstanding check
After completing a Bank Reconciliation, the adjusted Bank Statement and Cash Book balances should ______. Can you fill in the blank?
a) Be different
b) Be zero
c) Be added together
d) Match
The Bank Statement shows an unadjusted balance of $3,000. A deposit in transit of $400 is identified. What is the adjusted bank balance?
a) $2,600
b) $3,000
c) $3,400
d) $3,800
The unadjusted Cash Book balance is $1,500. A bank fee of $60 and interest earned of $120 were omitted. What should the adjusted Cash Book balance be?
a) $1,320
b) $1,440
c) $1,560
d) $1,680
Scroll down to see the answers.
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Bank Reconciliation Quiz: Answers
Here are the answers:
d) Cash Book and Bank Statement. A Bank Reconciliation compares the Cash Book with the Bank Statement to look for any differences.
b) The business. The Cash Book is an internal record maintained by a business to track cash receipts and payments.
a) The bank. The Bank Statement is issued by the bank and shows the bank’s record of receipts and payments.
b) The business. The business carries out a Bank Rec to compare its own cash records with the Bank Statement.
c) To ensure the Cash Book agrees with the Bank Statement. The Bank Rec ensures that the Cash Book agrees with the Bank Statement.
c) At least once per month. It’s good practice to reconcile bank accounts regularly to check for errors and discrepancies.
a) Reconciling items are transactions or errors that cause differences between the Cash Book balance and the Bank Statement balance.
c) Appears in both the Cash Book and the Bank Statement. A matched transaction appears in both the Cash Book and the Bank Statement and agrees in amount.
d) Require no further action. Matched transactions already appear in both records and agree in amount, so no further action is needed.
a) Timing delays. Timing differences occur when transactions are recorded by the business and the bank in different periods. This causes temporary differences between the Cash Book and Bank Statement.
b) Deposit in transit. A deposit in transit is cash that's been received and recorded in the Cash Book, but not yet shown on the Bank Statement. This can happen when a business deposits cash or a check on the last day of the month after the bank’s cut-off time. It should be added to the Bank Statement balance in the Bank Rec.
c) Has been issued but not yet cleared by the bank. An outstanding check has been written and recorded by the business but has not yet been cleared by the bank. It's a timing difference and should be deducted from the Bank Statement balance in the Bank Rec.
b) A transaction missing from one record. An omission occurs when a transaction appears in one record but is missing from the other.
d) A bank fee not recorded in the Cash Book. A bank fee recorded by the bank but not yet recorded in the Cash Book is a common example of an omission. It should be deducted from the Cash Book balance in the Bank Rec.
d) A customer’s check is returned unpaid by the bank. NSF stands for Non-Sufficient Funds and occurs when a customer’s check bounces due to insufficient funds. It's treated as an omission in the Bank Reconciliation.
c) Journal Entries. Omissions can occur in either record, but they're most often found in the Cash Book and require an adjusting journal entry to correct them.
b) Debit Cash, Credit Interest Income. Interest Received is a common omission in a Bank Reconciliation. The business should debit Cash to record the receipt in their Cash Book, and credit Interest Income to recognise the revenue earned.
b) A cash error. This is most likely a transposition error, where the business has recorded the check incorrectly by reversing the digits in the Cash Book.
d) Match. After all reconciling items are accounted for, the adjusted Bank Statement and Cash Book balances should be the same.
c) $3,400. A deposit in transit is a timing difference. The cash deposit has been recorded in the Cash Book but not yet by the bank, so it is added to the Bank Statement balance in the Bank Reconciliation, giving adjusted total of $3,400.
c) $1,560. Two omissions have been identified in the Cash Book. The bank fee reduces cash by $60 and the interest earned increases it by $120, giving an adjusted Cash Book balance of $1,560.
How did you go? Share your score in the comments below.
Bank Rec: Video Tutorial
In this short tutorial I’ll show you how to perform a Bank Reconciliation in seven simple steps. We’ll define the Bank Statement and Cash Book, and learn how the following situations can create reconciling items:
Omissions
Timing Differences
Errors
In this short tutorial, I’ll teach you everything you need to know about invoices in accounting.