Future Business Leaders of America (FBLA) Accounting Practice Test

What does reconciling a bank statement involve?

1. Comparing bank fees with check records

2. Determining differences between bank statement and checkbook balances

3. Calculating total deposits made

4. Sorting transactions in chronological order

The correct answer is: Determining differences between bank statement and checkbook balances

Reconciling a bank statement involves determining the differences between the bank statement balance and the checkbook balance. This process is essential for ensuring that all transactions are accurately recorded and accounted for in both the bank's records and the individual's or business's records. When reconciling, one typically reviews each transaction listed on the bank statement and compares it with the corresponding entries in the checkbook. This may involve checking off transactions that match, identifying any that do not, and explaining discrepancies such as outstanding checks, bank fees, or deposits in transit. Successfully completing this process helps in identifying errors, preventing fraud, and providing an accurate picture of financial health. While reviewing bank fees, calculating total deposits, and sorting transactions may be part of managing finances or preparing for reconciliation, these tasks do not directly address the core objective of reconciling, which is to confirm and understand the differences in balances.