Florida Building Contractor Business/Finance Practice Exam

In this scenario, the company initially recorded its cash receipts as $165, but the actual cash receipts were only $156. To reconcile the cash balance per books with the actual receipts, an adjustment is necessary. Since the recorded amount of $165 is greater than the actual amount of $156, this indicates that the company has overstated its cash receipts. To correct this error, the company must decrease the cash balance in its books by the difference between the recorded amount and the actual amount. The difference here is $165 (recorded) minus $156 (actual), which equals $9. Therefore, to align the book balance with the actual cash received, the company needs to decrease the cash balance by $9. This adjustment ensures that the financial records accurately reflect the company's cash position, maintaining proper accounting practices.