Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 38

For the following questions, circle the best response.

Regarding bank reconciliations, which of the following is true?

a. Deposits in transit are added to the bank balance.

b. Service charges are subtracted from the bank balance.

c. Interest earned on notes collected by the bank is not a reconciling item (only the note itself is a reconciling item).

d. NSF checks result in the recognition of bad debts expense on the books.

e. Outstanding checks are subtracted from the book balance.