If a customer's cheque that has been deposited is returned with the bank statement marked "insufficient funds (NSF)," it would appear on the bank reconciliation as a deduction from the ending bank balance of the company.

Question

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If a cheque deposited by a company is returned by the bank due to insufficient funds (NSF), it means that the company cannot collect that specific amount. Therefore, this amount will be deducted from the company's bank balance when preparing the bank reconciliation statement.

If a Customer's Cheque That Has Been Deposited Is Returned