BACHELOR OF BUSINESS ADMINISTRATION

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BUSINESS ADMINISTRATION

FINANCIAL ACCOUNTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
If a check correctly written and paid by the bank for $724 is incorrectly recorded on the company’s books for $742, the appropriate treatment on the bank reconciliation would be to
A
add $18 to the bank balance.
B
add $18 to the book balance.
C
deduct $724 from the bank balance.
D
deduct $724 from the book balance.
Explanation: 

Detailed explanation-1: -Items that do not require adjustments: Deposits in transit. Outstanding checks. Bank errors.

Detailed explanation-2: -Deposits in transit would be added to the balance per bank statement in a bank reconciliation.

Detailed explanation-3: -The interest income is found under the book side of a bank reconciliation. Interest income is usually earned by a checking account from the bank, and is reflected automatically in the bank balance once earned. The interest income should be added to the book balance to add the income earned.

Detailed explanation-4: -Answer and Explanation: The correct answer is c. deposit in transit and outstanding checks. While reconciling the bank balance, we add deposit in transit and subtract outstanding checks.

There is 1 question to complete.
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