BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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you do not need to know which checks are outstanding
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Service fees charged by the bank are added to your check register
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outstanding deposits are added to the bank statement balance
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Outstanding checks are added to the bank statement balance
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Detailed explanation-1: -Using the cash balance shown on the bank statement, add back any deposits in transit. Deduct any outstanding checks. This will provide the adjusted bank cash balance. Next, use the company’s ending cash balance, add any interest earned and notes receivable amount.
Detailed explanation-2: -Example of Outstanding Checks When the company prepares a bank reconciliation, the outstanding checks are subtracted from the bank statement balance in order to determine the correct or adjusted bank balance.
Detailed explanation-3: -An outstanding deposit is that amount of cash recorded by the receiving entity, but which has not yet been recorded by its bank. All outstanding deposits are listed as reconciling items on the periodic bank reconciliation prepared by the receiving entity.
Detailed explanation-4: -Outstanding Checks should be subtracted from the bank side of the reconciliation because they were subtracted from the book balance when the checks were written. Bank Service Charges – These are amounts that the bank withdraws from the account as a charge for having the account.
Detailed explanation-5: -For example, you record an outstanding deposit in your books before it’s on the bank statement. In that case, you must adjust your books to match the bank statement balance. To adjust your records for outstanding deposits, subtract the outstanding deposit from your books.