What impact will a Deposit in Transit and an Outstanding Check have on a company's accounting records after a reconciliation is completed? (will cash have to increase or decrease based on the reconciling item)
A)Deposit in Transit will need to increase the Cash account and Outstanding Checks will decrease the Cash account.
B)Deposit in Transit will need to decrease the Cash account and Outstanding Checks will increase the Cash account.
C)Both will increase the Cash account.
D)No change needs to be made to the Cash account for Outstanding Checks and Deposits in Transit.

Question

Quizplus · Accepted Answer

Deposits in Transit and Outstanding Checks are adjustments made in the bank reconciliation process to align the bank's records with the company's records. They do not require adjustments to the company's Cash account in the accounting records; they explain differences between the bank statement and the cash ledger.

What Impact Will a Deposit in Transit and an Outstanding