Final answer:
The most effective method to detect the erroneous recording of a bank loan receipt as interest revenue is to request a bank confirmation as of year-end, which compares the bank's records with the company's books.
Step-by-step explanation:
The correct option : b
Send a bank confirmation as of year-end is the most effective method for detecting the bookkeeper's error of recording the receipt of a one-year bank loan incorrectly. To detect this error, the company should verify all its bank-related activity directly with the bank.When a bank confirmation is requested, the bank provides a statement of the company's accounts and notes payable, including the terms of its loans. This allows the company to verify that the loan was indeed recorded and that it was classified correctly.
If the loan receipt was mistakenly credited to interest revenue, this will be evident when comparing the bank's information to the company's records.Other methods such as footing the cash receipts journal for November, preparing a bank reconciliation, or preparing a bank transfer schedule may also be useful in general accounting practices. However, they are less likely to detect this specific type of clerical error since they focus more on cash transactions and cash balances rather than on loan details.