Accounting 6e ORION Practice Ch 7 Fraud Internal Control an

Accounting, 6e ORION Practice - Ch 7: Fraud, Internal Control, and Cash KRUZEL, TIME SPENT Qu Q7.29: Which of the following transactions that needs to be reconciled between the bank statement and the books is likely the result of time lag? A) The company deposited a check 10 days before the end of the bank statement cycle. The check appears on the books but has not been added to the account balance. B The company deposited a check for $930 and the bank statement shows a deposit for $390. c) The bank statement shows a credit card transaction fee of $50 for the bank statement cycle. D The company wrote a check and mailed it to a vendor the day before the end of the bank statement cycle. The check appears on the books but not the bank statement.

Solution

The transaction (A) of depositing a cheque 10 days before the end of the bank statement cycle and the cheque appears on the books but has not been added to the account balance needs to be reconciled between the bank statement and the books. This reconciliation is likely the result of time lag. Generally cheque is processed in 2-3 days after depositing in bank. The time gap of 10 days is a cause for concern.