Accounting Online Program Certification Practice Test

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Prepare for the Accounting Online Program Certification Test. Use flashcards and multiple choice questions with detailed explanations. Ace your accounting certification exam with confidence!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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What is the closing balance as shown by the bank statement after adjustments?

  1. £670 overdrawn

  2. £388 overdrawn

  3. £580 overdrawn

  4. £290 overdrawn

The correct answer is: £388 overdrawn

The closing balance on a bank statement represents the final amount after accounting for all transactions, including outstanding checks, deposits in transit, bank fees, and any errors. In this context, the correct answer of £388 overdrawn suggests that, after making necessary adjustments, this is the negative balance that remains. This outcome indicates that, when all transactions that have not yet been processed by the bank are considered, the total liabilities exceed the total assets in the account. Therefore, the bank records show that the account holder has used more funds than are available in their account. Adjustments made to arrive at this balance typically involve reconciling the bank statement with the company's cash account to ensure accuracy regarding deposits and withdrawals. The other options would represent different overdrawn amounts that reflect either miscalculations or incomplete adjustments of transactions that were not properly accounted for according to the bank’s records. Such discrepancies could arise if some transactions were omitted from the reconciliation process or if there were adjustments that have not been made accurately.