BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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have been recorded on the company’s books but not yet by the bank.
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have been recorded by the bank but not yet by the company.
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have not been recorded by the bank or the company.
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are checks from customers which have not yet been received by the company.
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Detailed explanation-1: -A deposit in transit is money that has been received by a company and recorded in the company’s accounting system. The deposit has already been sent to the bank, but it has yet to be processed and posted to the bank account.
Detailed explanation-2: -Any deposits not yet recorded by the bank are deposits in transit and should be added to the balance shown in the bank statement.
Detailed explanation-3: -A deposit in transit is cash and checks that have been received and recorded by an entity, but which have not yet been recorded in the records of the bank where the funds are deposited.
Detailed explanation-4: -In a bank reconciliation, items recorded by the bank, but not yet recorded by the company, include: bank collections of accounts receivable.
Detailed explanation-5: -A deposit in transit is also known as an outstanding deposit. When there is a deposit in transit, the amount should be listed on the company’s bank reconciliation as an addition to the balance per bank.