BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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added to the balance per bank.
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deducted from the balance per books.
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added to the balance per books.
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deducted from the balance per bank.
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Detailed explanation-1: -Outstanding checks are those that have been written and recorded in cash account of the business but have not yet cleared the bank account. They need to be deducted from the bank balance. This often happens when the checks are written in the last few days of the month.
Detailed explanation-2: -In a bank reconciliation the outstanding checks are a deduction from the bank balance (or balance per the bank statement). If an outstanding check from the previous month did not clear the bank account in the current month, the check will remain on the list of outstanding checks.
Detailed explanation-3: -Bank Reconciliation Procedure 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. Deduct any bank service fees, penalties, and NSF checks.
Detailed explanation-4: -Any outstanding checks that have still not cleared the bank will need to remain on the outstanding check list portion of the bank reconciliation. Any deposits in transit that do not appear on the bank statement will remain reconciling items, but will need to be researched with the bank.
Detailed explanation-5: -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.