If a Check Correctly Written and Paid by the Bank

question 107

Multiple Choice

If a check correctly written and paid by the bank for ¥4,710 is incorrectly recorded on the company's books for ¥4,170, the appropriate treatment on the bank reconciliation would be to

• A) add ¥540 to the book's balance.
• B) subtract ¥540 from the book's balance.
• C) deduct ¥540 from the bank's balance.
• D) deduct ¥4,710 from the book's balance.

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Definitions:

Adjusting Entries

Entries recorded at the conclusion of an accounting period to adjust the balances of accounts prior to the compilation of financial statements.

Income Statement Accounts

Accounts used to record transactions affecting a company’s income, expenses, and the resulting net income or loss over a period of time.

Balance Sheet Accounts

Categories within the balance sheet that include assets, liabilities, and shareholders' equity, each of which is essential for showcasing the company's financial health.

Natural Business Year

A fiscal year that ends when a business's sales activities are at their lowest point, facilitating easier inventory and activity analysis.