An NSF cheque should appear in which section of the bank reconciliation?
A) Addition to the balance per books.
B) Deduction from the balance per books.
C) Addition to the balance per bank.
D) Deduction from the balance per bank.

Question

Quizplus · Accepted Answer

An NSF (Non-Sufficient Funds) cheque is a cheque that cannot be processed because the account holder does not have enough funds. It should be deducted from the balance per books because the company would have initially recorded the cheque as a deposit, increasing its cash balance. When the cheque is returned, the company needs to reverse this entry, decreasing its cash balance.

An NSF Cheque Should Appear in Which Section of the Bank