In preparing a bank reconciliation statement, the amount of cheques outstanding would be?Question 11Answera.Added to the bank balance according to the depositor’s recordsb.Deducted from the bank balance according to the bank statementc.Added to the bank balance according to the bank statementd.Deducted from the bank balance according to the depositor’s records
Question
In preparing a bank reconciliation statement, the amount of cheques outstanding would be?Question 11Answera.Added to the bank balance according to the depositor’s recordsb.Deducted from the bank balance according to the bank statementc.Added to the bank balance according to the bank statementd.Deducted from the bank balance according to the depositor’s records
Solution
The correct answer is d. Deducted from the bank balance according to the depositor’s records.
Here's why:
When preparing a bank reconciliation statement, the goal is to match the bank's records with the company's (or depositor's) records. Outstanding cheques are those that the company has issued, but the bank has not yet processed.
So, from the company's perspective, that money is already spent - it's been deducted from their records. But the bank doesn't know that yet, because they haven't processed the cheque.
Therefore, to make the bank's records match the company's, you would need to deduct the amount of the outstanding cheques from the bank balance according to the depositor’s records.
Similar Questions
In a bank reconciliation, the balance per bank will have _____________ deducted from its total.Select answer from the options belowinterest earnedoutstanding chequesEFT transfersdeposits in transit
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