In preparing a bank reconciliation statement, the amount of cheques outstanding would be?Question 4Answera.Added to the bank balance according to the depositor’s recordsb.Deducted from the bank balance according to the bank statementc.Added to the bank balance according to the bank statementd.Deducted from the bank balance according to the depositor’s records
Question
In preparing a bank reconciliation statement, the amount of cheques outstanding would be?Question 4Answera.Added to the bank balance according to the depositor’s recordsb.Deducted from the bank balance according to the bank statementc.Added to the bank balance according to the bank statementd.Deducted from the bank balance according to the depositor’s records
Solution
The correct answer is d. Deducted from the bank balance according to the depositor’s records.
Here's why:
When preparing a bank reconciliation statement, the goal is to match the bank's records with the depositor's records. Outstanding cheques are cheques that have been written and recorded by the depositor but have not yet been cleared by the bank.
Since these cheques have been recorded in the depositor's records but not the bank's, they would reduce the balance according to the depositor's records. Therefore, to reconcile the two balances, the amount of the outstanding cheques would be deducted from the bank balance according to the depositor's records.
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