How are Deposits in Transit handled during Bank Reconciliation?
AAdded to the balance per bank statement
BDeducted from the balance per bank statement
CDeducted from the balance per cash book
DIgnored until next accounting period
Explanation
Core Concept: Deposits in transit are cash/checks received and recorded by the firm, but not yet recorded by the bank on the statement date. Thus, they are added to the bank balance. Context/Distractors: Outstanding checks are deducted from the bank balance. Bank charges are deducted from cash book balance. Exam Tip/Key Fact: Deposits in transit increase the balance per bank statement.
Exam Relevance
- Topic: Financial Accounting
- Subtopic: Bank Reconciliation
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