Which of the following statements is true regarding a credit memo and its relationship to a company's bank reconciliation procedures?
A)It must be recorded as a credit to the balance per the customer's records.
B)It is issued to notify a company of bank service charges which need to be recorded on the company's records.
C)It is issued when a customer gives the company an NSF check which needs to be recorded on the company's records.
D)It must be recorded as a debit to the balance per the company's records.

Question

Quizplus · Accepted Answer

A credit memo from a bank indicates an increase in the company's bank account, such as a deposit correction or interest earned, which should be recorded as a debit (increase) in the company's records to match the bank's records during reconciliation.

Which of the Following Statements Is True Regarding a Credit