The accountant for a local manufacturing company is reconciling the company’s bank account for May. For each item listed, state how it would be handled on a bank reconciliation. (Choices may be used more than once.)
-Customer's NSF check returned with the bank statement
A)Addition to bank balance
B)Subtraction from bank balance
C)Addition to company balance
D)Subtraction from company balance
E)Not included on the reconciliation

Question

Quizplus · Accepted Answer

A customer's NSF (Non-Sufficient Funds) check returned with the bank statement would be a subtraction from the company balance because the company would have previously recorded this check as a deposit, increasing its book balance. When the check is returned NSF, the company needs to reverse this entry, decreasing its book balance.

The Accountant for a Local Manufacturing Company Is Reconciling the Company’s