Your company writes a cheque for $857.Which of the following describes how this transaction should be accounted for?
A)You add $857 to your recorded cash balance and the bank deducts $857 from your chequing account balance.
B)You deduct $857 from your recorded cash balance and the bank deducts $857 from your chequing account balance.
C)You add $857 to your recorded cash balance and the bank adds $857 to your chequing account balance.
D)You deduct $857 from your recorded cash balance and the bank adds $857 to your chequing account balance.

Question

Quizplus · Accepted Answer

When the company writes a cheque for $857, the recorded cash balance of the company reduces by $857. So, the correct option would be to deduct $857 from the recorded cash balance (as mentioned in option B). At the same time, the bank will also deduct $857 from the company's chequing account balance.

Your Company Writes a Cheque for $857