If a check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period,in preparing this period's reconciliation,the amount of this check should be:
A)Added to the book balance of cash as an outstanding check.
B)Deducted from the book balance of cash as an outstanding check.
C)Added to the bank balance of cash as an outstanding check.
D)Deducted from the bank balance of cash as an outstanding check.
E)Ignored in preparing the period's bank reconciliation as an outstanding check.

Question

Quizplus · Accepted Answer

Outstanding checks are checks that have been written and recorded in the company's cash ledger but have not yet been cashed by the recipient. When preparing a bank reconciliation, outstanding checks from the previous period that have not yet cleared the bank should be deducted from the bank balance of cash. This adjustment is made because the bank balance has not yet been reduced by these checks, while the company's book balance already reflects these deductions.

If a Check That Was Outstanding on Last Period's Bank