When a depositor receives a bank statement indicating that there was a "NSF check," the depositor should do which of the following?
A)Reduce the cash account per the books for the amount of the "NSF check."
B)Reduce the cash account per the bank statement for the amount of the "NSF check."
C)Debit allowance for doubtful accounts for the amount of the check.
D)Increase the sales returns and allowances account.

Question

Quizplus · Accepted Answer

NSF stands for "non-sufficient funds," which means that the person who wrote the check did not have enough money in their account to cover the check amount. Therefore, the depositor should reduce their cash account per their own books by the amount of the NSF check, as the deposit should not have been counted as part of their available funds.

When a Depositor Receives a Bank Statement Indicating That There