An NSF check is an example of a cash transaction that is initially recorded by the bank and later by the company after notification.

Question

Quizplus · Accepted Answer

An NSF (non-sufficient funds) check is initially recorded by the bank as a decrease in the account balance of the issuer and an increase in the account balance of the recipient. After notification of the NSF status, the company will record the transaction as a decrease in their account balance and a potential loss (or expense) on their income statement. So, the statement in the question is true.

An NSF Check Is an Example of a Cash Transaction