Multiple Choice
Which of the following situations would most likely result in a restriction from filing for bankruptcy under U.S. law?
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6. Internal Controls and Reporting Cash
Bank Reconciliation
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Which of the following is NOT a step in reconciling a bank statement?
A
Recording journal entries for bank service charges and interest
B
Preparing a budget for the next fiscal year
C
Identifying outstanding checks and deposits in transit
D
Comparing the company's cash records with the bank statement
Verified step by step guidance1
Understand the purpose of bank reconciliation: It is the process of comparing the company's cash records with the bank statement to ensure accuracy and identify discrepancies.
Review the typical steps involved in reconciling a bank statement: These include identifying outstanding checks, deposits in transit, and recording journal entries for bank service charges and interest.
Analyze the options provided in the question: Determine which activities are directly related to the reconciliation process and which are unrelated.
Recognize that preparing a budget for the next fiscal year is a financial planning activity and not part of the bank reconciliation process.
Conclude that the correct answer is the activity that does not align with the reconciliation process, which is 'Preparing a budget for the next fiscal year.'
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