Question

NSF checks from customers should be a(n) ______ on a bank reconciliation.

a)addition to the bank balance
b)subtraction from the bank balance
c)addition to the book balance
d)subtraction from the book balance

Answer 1

NSF checks should be subtracted from the book balance in a bank reconciliation because they represent payments that were expected but not received.

Step-by-step explanation:

NSF (Non-Sufficient Funds) checks from customers should be a subtraction from the book balance on a bank reconciliation. When a bank reconciliation is being prepared, NSF checks are considered among the items that cause a difference between the bank's records and the company's book balance. Because an NSF check represents a payment that was expected but not actually received due to insufficient funds in the customer's account, the company needs to deduct this amount from its book balance to reflect the accurate amount of available funds.