On a bank reconciliation,outstanding checks and NSF checks are deductions from the bank balance.

Question

Quizplus · Accepted Answer

Outstanding checks are deductions from the bank balance because they represent checks issued by the company that have not yet been cleared by the bank. However, NSF (Non-Sufficient Funds) checks are added back to the bank balance when preparing a bank reconciliation because they were previously deducted from the bank balance when the bank assumed they would clear, but then they bounced due to insufficient funds in the issuer's account.

On a Bank Reconciliation,outstanding Checks and NSF Checks Are Deductions