Multiple Choice
On a bank reconciliation, which of the following items would be subtracted from the bank statement balance to arrive at the adjusted bank balance?
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6. Internal Controls and Reporting Cash
Bank Reconciliation
Multiple Choice
8. What was the result of John overdrawing his checking account?
A
The bank automatically closed John's account.
B
John's account balance increased due to interest earned.
C
A bank service charge or overdraft fee was assessed to John's account.
D
John received a credit from the bank for the overdraft.
Verified step by step guidance1
Understand the concept of overdrawing a checking account: Overdrawing occurs when a withdrawal exceeds the available balance in the account, leading to a negative balance.
Recognize the typical consequences of overdrawing: Banks often impose penalties such as overdraft fees or service charges to cover the administrative costs of handling the overdraft.
Analyze the options provided in the problem: Evaluate each statement to determine which aligns with standard banking practices for overdrafts.
Eliminate incorrect options: For example, banks do not typically close accounts immediately for overdrafts, nor do they credit accounts or increase balances due to interest earned in such situations.
Select the correct answer: Based on the analysis, the most accurate consequence of overdrawing a checking account is the assessment of a bank service charge or overdraft fee.
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