Which of the following items identified during a bank reconciliation would require an adjustment to the book balance?

• A. Bank service charges
• B. Outstanding checks
• C. Bank errors
• D. Deposits in transit

Answer: (A)

Verified step by step guidance

1. Understand the concept of bank reconciliation: Bank reconciliation is the process of comparing the bank statement with the company's book balance to identify discrepancies and ensure accuracy in financial records.
2. Identify the items listed in the problem: Bank service charges, outstanding checks, bank errors, and deposits in transit. Determine which of these items affect the book balance and require adjustments.
3. Analyze each item: Bank service charges are fees charged by the bank and are not recorded in the company's books until identified during reconciliation. These require an adjustment to the book balance.
4. Consider the other items: Outstanding checks are checks issued by the company but not yet cleared by the bank. These do not require adjustments to the book balance, as they are already recorded in the company's books. Deposits in transit are deposits made by the company but not yet reflected in the bank statement. These also do not require adjustments to the book balance.
5. Evaluate bank errors: Bank errors may require adjustments to the book balance if the error affects the company's financial records. However, this depends on the nature of the error and whether it impacts the book balance directly.