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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

Which of these could be added to the ending book balance?

  1. (a) Service charges
  2. (b) NSF check
  3. (c) Checkbook errors that understate balance
  4. (d) Outstanding checks

To determine

Identify the option that can be added to the ending book balance.

Explanation

Bank reconciliation:

Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

Justification for the incorrect answer:

Option a:

Service charges are the charges made by the bank for the services provided by them like check printing and check processing. The service charges are deducted from the ending cash balance as per book because they are considered as debit memo. Therefore, Option  a is an incorrect answer.

Option b:

NSF check is the check deposited by the depositor and that are not paid because the drawer has insufficient funds. Not sufficient funds are deducted from the ending cash balance as per book because they are considered as debit memo...

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