When a depositor receives a bank statement indicating a "NSF cheque," what should he do?
A)credit a special receivable for the amount of the cheque.
B)record the amount as an expense of the current period.
C)credit the cash account for the amount of the cheque.
D)debit sales revenue.

Question

Quizplus · Accepted Answer

When a depositor receives a bank statement indicating a "NSF cheque," it means that the cheque was not cleared due to insufficient funds in the issuer's account. Therefore, the depositor should credit their cash account for the amount of the cheque since the deposit will be reversed.

When a Depositor Receives a Bank Statement Indicating a "NSF