Outstanding checks, deposits in transit, deductions for bank fees, additions for interest, and errors are all factors that can cause the bank statement balance for a checking account to be different from the company's checking account balance.

True

False

Answer: True

Explanation: Some of the factors that cause statement balance of a checking account to be different from the checking account of a company includes outstanding checks which is written, recorded on the companies books and sent to payee, but is not yet paid by the bank; deposit in transit; bank service charges and check printing charges; company's book error; electronic charges which appear on bank statement but aren't recorded in company's record. Items that are documented in the company's general accounts, but haven't appeared in the bank statement is taken note as an "adjustment to the balance per bank statement". Items such as bank service charges, check printing service etc, have been on the bank statement and haven't been entered into the books, the items are taken note as "adjustments to the balance per book". This result in the differences between a statement balance of checking account and company's checking account balance. A bank reconciliation is carried out to identify difference between bank's statement of balance and the company's checking account. The identified items are referred to as reconciling items.

The answer is true.

Explanation:

These factors can be categorizes in to several categories.

The time-related factors are Outstanding checks and deposits in transit. That means the related parties have initiated the transaction but due to the system of functioning, it takes time for the transaction to complete.

The other is human errors. Which can be error committed voluntarily or involuntarily at the hands of the people.

Making necessary adjustments and matching these differences is vital to keep check on the available. money balance in the business.