The bank will show a customer's withdrawal as a:
A)debit,because cash is an asset.
B)credit,because a withdrawal increases its liability from the bank's point of view.
C)debit,because a withdrawal decreases its liability from the bank's point of view.
D)credit,because cash is an asset.

Question

Quizplus · Accepted Answer

The bank statement is presented from the bank's point of view.The amounts in a company's bank account are liabilities to the bank because they will eventually be used by or returned to the account holder.As with all liabilities,increases are reported as credits on the bank statement.Amounts that are removed from a bank account reduce the bank's liability,so they are reported as debits on the bank statement.Banks typically explain the reasons for these increases (credits)and decreases (debits)with symbols or in a short memo,appropriately called a credit memo or debit memo.

The Bank Will Show a Customer's Withdrawal as A