Multiple Choice
Which report is primarily used to compare the cash balance per the company's records with the cash balance per the bank statement, identifying any differences between the two?
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6. Internal Controls and Reporting Cash
Bank Reconciliation
Multiple Choice
Which of the following would appear as a credit memorandum on the bank statement?
A
NSF (non-sufficient funds) checks
B
Interest earned on the account
C
Bank service charges
D
Outstanding checks
Verified step by step guidance1
Understand the concept of a credit memorandum: A credit memorandum on a bank statement represents an increase in the bank account balance. It is issued by the bank to notify the account holder of a credit adjustment.
Analyze each option provided in the problem: NSF checks, interest earned, bank service charges, and outstanding checks.
Evaluate NSF checks: NSF checks represent a deduction from the account balance, not an increase. Therefore, they would not appear as a credit memorandum.
Evaluate interest earned: Interest earned on the account increases the account balance and is recorded as a credit memorandum on the bank statement.
Evaluate bank service charges and outstanding checks: Bank service charges are deductions from the account balance, and outstanding checks are checks issued but not yet cleared by the bank. Neither would appear as a credit memorandum.
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