Jim Gave a Postdated Check Dated December 30 to One

question 32

Multiple Choice

Jim gave a postdated check dated December 30 to one of his creditors on December 22.However,the check was presented to Jim's bank on December 24,and the bank honored it.As a result,there was not enough money in his account to cover for another check he had written for December 27,and hence,the check bounced.The bank charged Jim a $20 fee for the bounced check.What is the bank's liability regarding this bounced check?

• A)The bank has no liability.
• B)The bank must compensate Jim for any losses that result from this bounced check.
• C)The bank is liable,but only for the $20 bank charge related to the bounced check.
• D)The bank is liable,but only for the immediate,direct damages that result from the bounced check.

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Definitions:

Inventories

Quantities of goods in stock that are held by a business for the purpose of sale or production.

Retrospective Adjustment

An accounting practice where prior period financial statements are adjusted to reflect changes in accounting policies or correction of errors as if the new policy had always been applied.

Financial Statements

Reports that provide an overview of a company's financial condition, performance, and cash flows.

Cumulative Effect

The total change in financial statement results over a period of time due to an accounting principle change or correction of an error.