A Cheque of $75 Deposited by a Company Was Returned

question 120

Multiple Choice

A cheque of $75 deposited by a company was returned to the bank for nonsufficient funds. How would this information be included on the bank reconciliation?

• A)An addition on the bank side
• B)An addition on the book side
• C)A deduction on the bank side
• D)A deduction on the book side

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Definitions:

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, indicating the company's financial performance over a specific period.

Discount Expense

The cost associated with the difference between the face value of a payable and the actual amount paid, recognized over the life of the debt.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a stock, bond, commodity, or other assets at a specified price within a specific time period.

Cash Flow Hedge

A cash flow hedge is a hedging strategy used to manage exposure to variability in cash flows associated with a particular risk, typically related to interest rates, commodity prices, or currency exchange rates.