The Bank Statement of a Business Shows an Overdraft of $10

question 54

Multiple Choice

The bank statement of a business shows an overdraft of $10 000 at 31 March. In reconciling the account at that date indicate the treatment you would give to cheque no. 461 for $30 that was drawn on 25 March but had not yet been presented for payment.

• A) Subtract from the bank statement balance in the bank reconciliation.
• B) Add to the bank statement balance in the bank reconciliation.
• C) Record in the cash receipts journal.
• D) Record in the cash payments journal.

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Definitions:

Failure to Pay

A situation where an individual or corporation does not meet the due date for payment of taxes owed, potentially resulting in penalties.

Automatic Extension

An allowance by the IRS that gives taxpayers an additional period to file their tax returns without penalty.

Tax Return

A document filed with a tax authority that reports income, expenses, and other relevant financial information, used to calculate tax liability.

Marginal Tax Rate

The rate at which the last dollar of a taxpayer's income is taxed, indicating the rate of tax applied to their highest level of income.