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:

Outstanding Checks

Checks issued by a company that have not yet been cashed or cleared by the bank.

Deposits in Transit

Funds that have been received and recorded by a company but not yet credited by the bank, often seen in the reconciliation of bank statements.

Bank Statement Balance

The ending balance on a bank statement, representing the total amount of money in an account as recorded by the bank at the end of a given period.

Petty Cash Account

A small amount of cash kept on hand to pay for minor or incidental expenses.