A nonsufficient funds check was returned to your company.How does the bank treat this on your bank statement?
A)It is added to the bank balance.
B)It is shown as a debit memo.
C)It is shown as a credit memo.
D)None of these answers is correct.

Question

Quizplus · Accepted Answer

When a nonsufficient funds check is returned, the bank treats it as a debit memo on the bank statement, reducing the company's balance in the account. This is because the bank is deducting the amount of the NSF check from the company's account to cover the cost of the check being returned. Option A is incorrect because it would imply that the NSF check increases the bank balance, which is not the case. Option C is also incorrect because a credit memo would indicate that money is being added to the account, which is not happening in the case of an NSF check. Option D is incorrect because one of the choices must be correct.

A Nonsufficient Funds Check Was Returned to Your Company