Question

How do you record the withdrawal of the individual bank fee associated with a bounced check?

a. Create an expense categorized to a bank charges expense account
b. Record it as an income in the bank account
c. Ignore the transaction
d. Create a liability account for bank fees

Answer 1

Recording a bank fee from a bounced check is done by creating an expense categorized to a bank charges expense account, reflecting it correctly in the company's financial records.

Step-by-step explanation:

To record the withdrawal of the individual bank fee associated with a bounced check, you would create an expense categorized to a bank charges expense account. This transaction reflects an expense for the company due to the fee charged by the bank. It is not recorded as income, ignored, nor is a liability account created for it. Instead, the bank fee amount is entered into the company's accounting system as an expense to properly reflect the financial activity and maintain accurate records.