Adjustments of Cash Books - SS1 Accounting Past Questions and Answers - page 1
What is the purpose of making adjustments to the cash book?
To ensure that the book balance matches the bank balance
To keep track of cash transactions only
To report financial performance to shareholders
To calculate taxes
What is the first step in making adjustments to the cash book due to the introduction of a bank statement?
Compare the transactions recorded in the cash book with the transactions recorded in the bank statement
Reconcile the cash book balance with the bank statement balance
Adjust the cash book to reflect any errors or discrepancies
Update the bank statement to include any missing transactions
What does it mean to reconcile the cash book with the bank statement?
To ensure that the book balance matches the bank balance
To update the cash book to include any missing transactions
To adjust the cash book to reflect any errors or discrepancies
To compare the transactions recorded in the cash book with the transactions recorded in the bank statement
Why is it important to make adjustments to the cash book when a bank statement is introduced?
To prevent errors in financial reporting
To calculate taxes
To keep track of cash transactions only
To report financial performance to shareholders
What can cause a difference between the cash book balance and the bank statement balance?
Errors or discrepancies in the cash book or bank statement
Cash transactions that were not recorded in the cash book
Bank transactions that were not recorded in the bank statement
All of the above
What is the final step in making adjustments to the cash book due to the introduction of a bank statement?
Why is it important for businesses to reconcile the cash book with the bank statement?