If a Check Correctly Written and Paid by the Bank

question 70

Multiple Choice

If a check correctly written and paid by the bank for $794 is incorrectly recorded in the company's books for $749, how should this error be treated on the bank reconciliation?

• A) Subtract $45 from the bank's balance.
• B) Add $45 to the bank's balance.
• C) Subtract $45 from the book balance.
• D) Add $45 to the book balance.
• E) Subtract $45 from the bank's balance and add $45 to the book's balance.

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Definitions:

Operating Activities

The day-to-day actions that businesses undertake to generate earnings, such as selling products or services.

Financing Activities

Activities that result in changes in the size and composition of the equity and borrowings of a company, as reported in the cash flow statement.

Statement of Cash Flows

is a financial statement that details the inflows and outflows of cash within a company over a specific period, highlighting its operating, investing, and financing activities.

Financing Activities

Transactions with creditors or investors used to fund either company operations or expansions.