Accompanying the bank statement was a debit memorandum for bank service charges.What adjustment is required in the depositor's accounts?
A) Increase Miscellaneous Expense; decrease Cash
B) Increase Cash; increase Other Income
C) Increase Cash; increase Accounts Payable
D) Decrease Accounts Payable; decrease Cash

Question

Quizplus · Accepted Answer

The debit memorandum for bank service charges means that the bank has charged the depositor for providing services. This needs to be recorded as an expense for the depositor and a decrease in cash. Therefore, the Miscellaneous Expense account needs to be increased, and the Cash account needs to be decreased.

Accompanying the Bank Statement Was a Debit Memorandum for Bank