Notification by the bank that a customer's deposited cheque was returned NSF requires that the depositor make the following adjusting entry:
A) Accounts Receivable Cash
B) Cash Accounts Receivable
C) Bank Charges Expense Accounts Receivable
D) No adjusting entry is necessary.

Question

Quizplus · Accepted Answer

When a cheque is returned NSF (Non-Sufficient Funds), it means the cheque was not honored due to insufficient funds in the payer's account. The depositor must reverse the initial entry that increased cash and record an increase in accounts receivable, as the amount is still owed.

Notification by the Bank That a Customer's Deposited Cheque Was