Asked by Savannah Calkins on Jun 29, 2024
Verified
The main reason that the bank statement cash balance and the company's cash balance do not initially balance is due to timing differences.
Bank Statement
A document provided by a bank, detailing the transactions in a customer's account over a specified period.
Cash Balance
The amount of cash a company has available at any point in time, as reflected in its financial statements.
Timing Differences
Discrepancies between the timing of cash flows and the recognition of revenues and expenses in accounting records.
- Gain an understanding of the function and necessity of internal control processes regarding cash and various assets.
Verified Answer
JF
juliana fernandezJul 01, 2024
Final Answer :
True
Explanation :
The bank statement cash balance and the company's cash balance may not initially match due to timing differences such as uncleared checks, deposits in transit, and bank fees. These timing differences can be resolved through the process of bank reconciliation.
Learning Objectives
- Gain an understanding of the function and necessity of internal control processes regarding cash and various assets.