A cheque that was outstanding on last month's bank reconciliation was not among the cancelled cheques returned by the bank this month. As a result, in preparing thismonth's reconciliation, the amount of this cheque should be:
A)Noted as a memo.
B)Deducted from the book balance of cash.
C)Added to the bank balance of cash.
D)Deducted from the bank balance of cash.
E)Added to the book balance of cash.

Question

Quizplus · Accepted Answer

Since the outstanding cheque did not clear, it means the bank never deducted that amount from the company's account. Therefore, it should be deducted from the bank balance of cash to arrive at the correct ending bank balance for the current month.

A Cheque That Was Outstanding on Last Month's Bank Reconciliation