How many steps are typically involved in the process of bank statement reconciliation as described in standard accounting procedures?

• A. Two steps
• B. One step
• C. Four steps
• D. Six steps

Answer: (C)

Verified step by step guidance

1. Understand the concept of bank statement reconciliation: It is the process of comparing the bank's records (bank statement) with the company's accounting records to ensure they match and identify any discrepancies.
2. Step 1: Compare the deposits recorded in the company's books with the deposits shown on the bank statement. Identify any missing or incorrect entries.
3. Step 2: Compare the checks issued by the company with those cleared by the bank. Look for outstanding checks or discrepancies in amounts.
4. Step 3: Adjust the company's books for any bank fees, interest income, or other transactions that appear on the bank statement but are not yet recorded in the company's books.
5. Step 4: Prepare a reconciliation statement to ensure the adjusted balances of the bank statement and the company's books match. Investigate and resolve any remaining discrepancies.