Notification by the bank that a customer's deposited cheque was returned NSF requires that the depositor make the following adjusting entry:
A)Accounts Receivable Cash
B)Cash Accounts Receivable
C)Bank Charges Expense Accounts Receivable
D)No adjusting entry is necessary.

Question

Quizplus · Accepted Answer

When a cheque is returned NSF (Non-Sufficient Funds), it means the cheque could not be processed due to insufficient funds in the issuer's account. The depositor needs to reverse the initial entry that increased cash and record an increase in accounts receivable, as the amount is still owed.

Notification by the Bank That a Customer's Deposited Cheque Was