Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

Which type of bank documentation increases a company's checking account balance at the bank?

Debit memorandum

Bank statement

Canceled check

Credit memorandum

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Verified step by step guidance

Understand the concept of a credit memorandum: A credit memorandum is a document issued by a bank to notify a company that its checking account balance has been increased. This could occur due to reasons such as a direct deposit, a correction of an error, or a refund.

Review the other options to clarify why they do not increase the checking account balance: A debit memorandum decreases the account balance, a bank statement is a summary of transactions, and a canceled check represents a payment made and does not increase the balance.

Relate the credit memorandum to the accounting principle of bank reconciliation: When a credit memorandum is issued, it reflects an increase in the company's cash balance at the bank, which must be accounted for in the company's books during reconciliation.

Consider the impact of the credit memorandum on the company's financial records: The company will need to record the increase in its cash account in its general ledger to match the bank's records.

Ensure understanding of the terminology: Emphasize that the term 'credit' in this context refers to the bank's perspective, where a credit increases the company's account balance, aligning with the double-entry accounting system.