What is the main purpose of an auditor's review of a bank reconciliation statement?
Correct answer: C. To compare recorded and bank-reported balances
- A. To calculate depreciation on bank assets
- B. To authorize payments to suppliers
- C. To compare recorded and bank-reported balances
- D. To determine the entity's gross profit
Explanation
A bank reconciliation compares the cash book balance with the bank statement and explains timing differences or errors. It does not calculate depreciation, authorize payments, or determine gross profit.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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