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 bank balance.
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deducted from the bank balance.
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added to the book balance.
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deducted from the book balance.
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Detailed explanation-1: -Deposits in transit are amounts that are received and recorded by the business but are not yet recorded by the bank. They must be added to the bank statement. Outstanding checks are those that have been written and recorded in cash account of the business but have not yet cleared the bank account.
Detailed explanation-2: -Deposits in Transit must be added to the bank side of the reconciliation because they have been added to the book side when the deposits were recorded by the company.
Detailed explanation-3: -Deposits in transit are added to the cash balance per books on the bank reconciliation. Deposits in transit are deposits the business knows are in route to the financial institution, but are not yet processed by the bank. They need to be added to the bank’s balance in the bank reconciliation process.