DECA Hospitality Services Team Decision Making Practice Exam

What is the process of comparing a monthly bank statement with entries in a checkbook called?

1. Budgeting

2. Cash-control procedure

3. Account reconciliation

4. Financial auditing

The correct answer is: Cash-control procedure

The correct answer is the process referred to as account reconciliation. This term describes the method used to ensure that the amounts reflected in a bank statement match those recorded in a checkbook or accounting ledger. During this reconciliation, any discrepancies are identified and investigated, which might include checks that have not yet cleared or bank fees that were not accounted for. In the context of financial management, accurate account reconciliation is crucial as it helps maintain a clear picture of cash flow, informs budget decisions, and aids in preventing fraud. The importance of this process lies in its role in confirming the accuracy and reliability of financial information, which is essential for sound decision-making in any hospitality business. The other options do not accurately define this specific process. Budgeting refers to the planning of income and expenditures, cash-control procedures encompass various practices for managing cash flow, and financial auditing involves an independent examination of financial statements.