In a Bank Reconciliation Statement, how are Outstanding Checks treated?
AAdded to the balance per bank statement
BDeducted from the balance per bank statement
CAdded to the balance per cash book
DDeducted from the balance per cash book
Explanation
Core Concept: Outstanding checks are checks written and recorded by the company (Cash Book), but not yet presented to or processed by the bank. Therefore, they are deducted from the bank statement balance to reach adjusted cash balance. Context/Distractors: Deposits in transit are added to bank balance. Bank service charges are deducted from cash book balance. Exam Tip/Key Fact: Outstanding checks decrease the bank statement balance in bank reconciliation.
Exam Relevance
- Topic: Financial Accounting
- Subtopic: Bank Reconciliation
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