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:

Dishonored Note

A promissory note that has not been paid by the maker at its maturity date, resulting in a default.

Journalize Entry

The act of recording a transaction in the accounting journal as part of the bookkeeping process.

Accounts Receivable Turnover

A financial metric indicating how often a company collects its average accounts receivable within a period, showing its efficiency in credit and collections.

Days' Sales in Receivables

A financial ratio that measures how well a company is managing its accounts receivable by calculating the average number of days it takes to collect payments from customers.