A bank reconciliation is a process performed by a company to ensure that the company's records are correct and that the bank's records are also correct.

• A. False
• B. Not always
• C. True
• D. Only during audits

Answer: (C)

Bank reconciliation compares the company's cash records with the bank statement to make sure both sets of records align. This process helps confirm the cash balance is accurate and that any differences are explained and corrected, such as outstanding checks, deposits in transit, bank fees, interest, or simple errors by either party. Because the purpose is to verify and adjust both the company's records and the bank's records, it is a routine control activity rather than something done only during audits. That’s why the statement is true.