In a bank reconciliation, which statement about bank errors and company errors is true?

• A. Bank errors are errors made by the bank; company errors are errors in the company's records; both may require adjustments to the balance.
• B. Bank errors are errors in the company’s books; company errors are mistakes by the bank; only bank errors require adjustments.
• C. Bank errors can be ignored; company errors always adjust the balance; only one type requires adjustments.
• D. Bank errors cannot affect cash balance; company errors always correct automatically.

Answer: (B)