The Following Data Were Obtained from the Bank Statement and from the Process

question 55

Multiple Choice

The following data were obtained from the bank statement and from the process of reconciling it: Bank service charges = $20
Deposit outstanding = $150
Interest earned on the bank account = $10
Checks outstanding = $400
Which items should be deducted from and added to the bank balance in completing the reconciliation?

• A)Deduct checks outstanding; add service charges and deposit outstanding.
• B)Deduct interest earned; add deposit outstanding.
• C)Deduct checks outstanding; add deposit outstanding.
• D)Deduct deposit outstanding; add checks outstanding.

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Definitions:

Interest Income

Earnings generated from the lending of money or from deposit funds in interest-bearing accounts.

Eligible Dividends

Dividends designated by a corporation to be eligible for a lower tax rate on the dividend income received by an individual shareholder.

Tax Paid

Refers to the total amount of taxes remitted to the relevant tax authorities for income, sales, property, or other forms of taxes.

Cash Flow

The total amount of money being transferred into and out of a business, representing its operating, investing, and financing activities.