From the bank reconciliation no entry was recorded for a debit memo for a new cheque fee expense. This would cause
A) liabilities to be understated.
B) liabilities to be overstated.
C) expenses to be understated.
D) expenses to be overstated.

Question

Quizplus · Accepted Answer

Not recording the debit memo for a new cheque fee expense means that the expense has not been recognized in the company's records. This would result in expenses being understated. The bank reconciliation only shows the differences between the bank statement and the company's records, so liabilities would not be affected by this discrepancy.

From the Bank Reconciliation No Entry Was Recorded for a Debit