Which method determines balances separately?

• A. Bank to Book Method
• B. Book to Bank Method
• C. Interest Earned Method
• D. Adjusted Method

Answer: (D)

Cash balances in a bank reconciliation are determined by analyzing each side separately. This means computing an adjusted balance for the bank side and an adjusted balance for the book side, then comparing them to ensure they agree. The method that does this—building two independent adjustments for both the bank’s records and the company’s books—is the one that determines balances separately. It requires listing items like deposits in transit and outstanding checks for the bank side, and unrecorded charges, interest, or errors for the book side, then arriving at two adjusted balances that should match. The other approaches either move from one side to the other or focus on recognizing interest or other items rather than establishing both adjusted balances independently.