Which of the following bank reconciliation items would require the cash on the company's books to be reduced?
A)Outstanding check
B)Deposit in transit
C)Non-sufficient funds check
D)Bank error

Question

Quizplus · Accepted Answer

A non-sufficient funds check means that the company's bank account was debited for a check that bounced or could not be processed due to insufficient funds in the account of the issuer. Therefore, the cash on the company's books should be reduced to reflect the fact that the check is not valid. Outstanding checks and deposit in transit are timing differences that do not affect the actual balance of cash on the company's books, while a bank error would be the responsibility of the bank to correct and would not affect the company's cash balance.

Which of the Following Bank Reconciliation Items Would Require the Cash