Classify each of the following reconciling items of the Tic and Tac Company as:

-Cheque returned by the bank marked NSF ________
A)an addition to the bank balance
B)a deduction from the bank balance
C)an addition to the book balance
D)a deduction from the book balance
E)not a reconciling item

Question

Classify each of the following reconciling items of the Tic and Tac Company as:

-Cheque returned by the bank marked NSF ________
A)an addition to the bank balance
B)a deduction from the bank balance
C)an addition to the book balance
D)a deduction from the book balance
E)not a reconciling item

Quizplus · Accepted Answer

A cheque returned by the bank marked NSF (Non-Sufficient Funds) means that a cheque deposited into the company's account was not honored due to insufficient funds in the issuer's account. This results in a deduction from the company's book balance, as the company would have previously recorded the cheque as an increase to its cash balance.

Classify Each of the Following Reconciling Items of the Tic