Which of the following is an effective way to address concerns about discrepancies in your checking account balance?

• A. Ignore the difference and wait for the next statement.
• B. Withdraw all funds immediately to avoid further discrepancies.
• C. Only rely on the bank's balance without keeping your own records.
• D. Prepare a bank reconciliation to compare your records with the bank statement.

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 (check register or accounting software) with the bank's statement to identify and resolve discrepancies.
2. Gather necessary documents: Obtain your bank statement and your own financial records, such as your check register or accounting software reports.
3. Identify discrepancies: Compare each transaction in your records with the transactions listed on the bank statement. Look for differences such as outstanding checks, deposits in transit, or bank fees.
4. Adjust your records: Update your personal financial records to account for any discrepancies, such as bank fees or interest income that may not have been recorded yet.
5. Prepare the reconciliation statement: Create a formal reconciliation statement that shows the adjustments made and ensures that the adjusted balance matches the bank's balance.