A Cheque Cashed by the Payee for $2,200 Was Recorded

question 7

Multiple Choice

A cheque cashed by the payee for $2,200 was recorded in the company's accounting records for $220. On a bank reconciliation:

• A)$1,980 will be added to the book balance.
• B)$1,980 will be deducted from the book balance.
• C)$1,980 will be added to the bank balance.
• D)$1,980 will be deducted from the bank balance.

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Definitions:

Fair Value

An estimate of the price at which an asset or liability could be traded in a fair transaction between willing parties, other than in a forced or liquidation sale.

Unrealized Gain

A profit that exists on paper resulting from an investment that has not yet been sold for cash, indicating an increase in value of the asset.

Equity Method

An accounting technique used to record an investor's proportional share of the associate company's earnings and losses.

Accounting Change

Any significant alteration in accounting policies, estimation methods, or reporting practices that impacts the financial statements of a company.