Which document is primarily used to validate the bank and credit card account balances reported on a company's balance sheet?

• A. Trial balance
• B. Cash flow statement
• C. Bank reconciliation statement
• D. Income statement

Answer: (C)

Verified step by step guidance

1. Understand the purpose of the bank reconciliation statement: It is a document used to compare the company's records of cash and credit card transactions with the bank's records to ensure accuracy and identify discrepancies.
2. Recognize that the trial balance is a summary of all ledger accounts and does not directly validate bank balances. It is used to check the mathematical accuracy of the accounting records.
3. Note that the cash flow statement provides information about cash inflows and outflows but does not directly reconcile or validate the bank account balances.
4. Understand that the income statement reports a company's revenues and expenses over a period but does not deal with reconciling bank balances.
5. Conclude that the bank reconciliation statement is the correct document for validating the bank and credit card account balances reported on the company's balance sheet, as it ensures the accuracy of these balances by comparing them with the bank's records.