In the normal operation of business you receive a check from a customer and deposit it into your checking account. With your bank statement you are advised that this check for $425 is "NSF". The bank also informs you that due to the amount of activity on your business account the monthly service charge is $45. During a bank reconciliation:

Question

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When reconciling the bank statement, you need to compare the transactions listed on the statement with the transactions listed in your own accounting records. The bank statement shows that the check for $425 was returned due to insufficient funds (NSF), which means it cannot be included in your bank balance. Therefore, you need to subtract this amount from the balance according to the books. Similarly, the monthly service charge of $45 is a fee that has been deducted by the bank from your account and should also be subtracted from the balance according to the books. Therefore, the correct choice is to subtract both values from the balance according to books (Option D).

In the Normal Operation of Business You Receive a Check