Bank reconciliations help detect irregularities by comparing bank statements with which records?

• A. The general ledger
• B. Budgets with actuals
• C. Invoices with receipts
• D. Cash on hand with petty cash

Answer: (A)

Bank reconciliations focus on aligning the cash balance shown by the bank with the cash balance recorded in the company’s books. The best match for detecting irregularities is the general ledger, specifically the cash account, because it tracks every cash transaction from the company’s perspective. By comparing the bank statement to the general ledger, you can spot items the bank has recorded that the company hasn’t (or vice versa), such as deposits in transit, outstanding checks, bank fees, interest, or posting errors. Budgets with actuals relate to planned versus actual performance, not the real-time movement of cash. Invoices with receipts pertain to revenue and payables documentation, not the bank’s cash activity. Cash on hand with petty cash covers internal cash handling rather than reconciling bank statements.