Question

The amount of cash related to a particular bank checking account that is shown on the balance sheet at December 31 is:

1) the cash balance shown on the bank's records at the close of business on December 31, without further adjustments.
2) the cash balance shown in the company's general ledger account for this checking account at the close of business on December 31, without further adjustments.
3) the cash balance shown in the general ledger account for this checking account as of the close of business on December 31, after recognizing any outstanding checks and/or deposits in transit from the December 31 bank account reconciliation.
4) the cash balance shown in the general ledger account for this checking account as of the close of business on December 31, after recognizing any bank service charges and/or interest income from the December 31 bank account reconciliation.

Answer 1

The amount of cash on the balance sheet at December 31 reflects the cash balance shown in the general ledger after adjustments for items such as outstanding checks and deposits in transit from the bank reconciliation process. correct answer is option 3

Step-by-step explanation:

The correct answer to the student's question is that the amount of cash related to a particular bank checking account that is shown on the balance sheet at December 31 is the cash balance shown in the general ledger account for this checking account as of the close of business on December 31, after recognizing any outstanding checks and/or deposits in transit from the December 31 bank account reconciliation. Therefore, the answer is option 3.

This balance reflects all the adjustments made during the bank reconciliation process, which ensures that the company's cash records are in line with the bank's records. These adjustments might include outstanding checks that have not been cleared by the bank, deposits in transit that have not been credited by the bank, bank service charges, and interest income.