Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is a (n)
A) deduction from the balance per company's records
B) addition to the balance per bank statement
C) deduction from the balance per bank statement
D) addition to the balance per company's records

Question

Quizplus · Accepted Answer

Bank service charges are expenses that the bank charges the company for its services. These charges are not usually recorded in the company's books until the bank statement is received. Therefore, to reconcile the company's cash account with the bank statement, the amount of the bank service charges needs to be deducted from the balance per the company's records. This adjustment ensures that the company's cash account reflects all outflows of cash, including bank service charges.

Accompanying the Bank Statement Was a Debit Memo for Bank