Question

In preparing your bank reconciliation, you notice that you recorded a deposit as 100 instead of 10. You should _____________.

1) Contact the bank to correct the deposit amount
2) Ignore the error and continue with the reconciliation
3) Adjust the deposit amount in your records
4) Withdraw the incorrect deposit amount from the bank

Answer 1

In bank reconciliation, when a deposit is recorded incorrectly in personal records, the proper step is to adjust the amount in one's own records. The bank's records are correct; the discrepancy lies in personal accounting, thus no bank contact is necessary.

Step-by-step explanation:

When preparing your bank reconciliation, and you notice that you recorded a deposit as 100 instead of 10, the correct action would be to adjust the deposit amount in your records. The bank has the correct amount; the error is in your books. It is essential to make sure that your accounting records reflect the actual transaction amounts to maintain accurate financial statements. The bank reconciliation process is a way to ensure that your records are in line with the bank's records and to identify and correct any discrepancies.

You should not contact the bank to correct the deposit amount since the bank's records are already correct. Ignoring the error is also not an option since it would leave your financial records inaccurate. Similarly, withdrawing the incorrect deposit amount from the bank does not address the issue at hand, as it would simply add another transaction to reconcile without solving the initial mistake.