A Credit Memo Appeared on the September Bank Statement

question 204

Multiple Choice

A credit memo appeared on the September bank statement. How should this amount be treated on the September bank reconciliation?

• A)Add it to the company's balance.
• B)Add it to the bank balance.
• C)Deduct it from the company's balance.
• D)Deduct it from the bank balance.

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's profits or losses.

Consolidated Net Income

The total net income of a parent company and its subsidiaries after accounting for minority interests, representing the overall profitability of the entire corporate group.

Acquisition Differential

The difference between the purchase price of an acquired entity and the net of the identifiable assets acquired plus liabilities assumed.

Undervalued Inventory

A situation where the reported value of inventory is less than its actual market value, possibly affecting financial statements negatively.