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

6. Internal Controls and Reporting Cash

Bank Reconciliation

Financial Accounting

6. Internal Controls and Reporting Cash

Bank Reconciliation

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Multiple Choice

How is a customer's NSF (non-sufficient funds) check reflected on a bank reconciliation?

It is subtracted from the bank balance.

It is added to the book balance.

It is added to the bank balance.

It is subtracted from the book balance.

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Verified step by step guidance

Understand the concept of NSF (non-sufficient funds) checks: An NSF check is a check that a customer has written but cannot be processed due to insufficient funds in their account. This means the check is essentially 'bounced' and the amount cannot be collected.

Recognize the impact on the company's books: When a company receives an NSF check, it initially records the check as a deposit, increasing the book balance. However, once the bank informs the company that the check has bounced, the company must reverse this deposit.

Determine the adjustment required: Since the NSF check was initially added to the book balance, the reversal requires subtracting the amount of the NSF check from the book balance to reflect the accurate financial position.

Understand why it does not affect the bank balance: The NSF check is a transaction between the customer and the company, not the bank. Therefore, it does not impact the bank balance directly but requires an adjustment in the company's books.

Apply the adjustment during bank reconciliation: During the reconciliation process, subtract the NSF check amount from the book balance to ensure the company's records align with the bank statement.