When you reconcile your checking account, what are you primarily doing?

• A. Depositing additional funds into your account
• B. Calculating the interest earned on your account
• C. Preparing financial statements for external reporting
• D. Comparing your records with the bank statement to identify and resolve any differences

Answer: (D)

Verified step by step guidance

1. Understand the concept of bank reconciliation: Bank reconciliation is the process of comparing your personal financial records (checkbook register or accounting software) with the bank statement provided by your financial institution.
2. Identify the purpose of reconciliation: The primary goal is to ensure that the records match and to identify any discrepancies, such as outstanding checks, deposits in transit, or bank errors.
3. Review the bank statement: Carefully examine the transactions listed on the bank statement, including deposits, withdrawals, fees, and interest earned.
4. Compare the bank statement with your records: Match each transaction in your records to the corresponding transaction on the bank statement. Note any differences, such as checks that have not cleared or deposits that have not yet been processed.
5. Adjust your records or contact the bank: Make necessary adjustments to your records for items like bank fees or interest earned. If discrepancies cannot be resolved, contact the bank to investigate further.