Which of the following statements is true regarding a credit memorandum and its relationship to a company's bank reconciliation procedures?
A) It must be added to the balance per the customer's records.
B) It is issued to notify a company of bank service charges which need to be recorded on the company's records.
C) It is issued when a customer gives the company an NSF check which needs to be recorded on the company's records.
D) It must be recorded as a debit to the balance per the company's records.

Question

Quizplus · Accepted Answer

A credit memorandum is a document issued by a bank to inform a company that its account has been credited with a certain amount, such as interest earned or a deposit made. This amount must be recorded as a credit to the company's records. Therefore, to reconcile the bank statement with the company's records, the credit memorandum must be recorded as a debit to the balance per the company's records.

Which of the Following Statements Is True Regarding a Credit