Question

An NSF check appears on the bank statement as a

a. debit memorandum that increases the account balance.
b. credit memorandum that decreases the account balance.
c. credit memorandum that increases the account balance.
d. debit memorandum that decreases the account balance.

Answer 1

An NSF check results in a debit memorandum on a bank statement, which decreases the account balance, representing a failed transaction due to insufficient funds. The correct option is d.

Step-by-step explanation:

An NSF check (Non-Sufficient Funds check), which is a check that cannot be processed because the account on which it was drawn lacks sufficient funds, appears on the bank statement as a debit memorandum that decreases the account balance.

This is because when a check is returned due to insufficient funds, the bank needs to debit (reduce) the account balance to reflect the failed transaction.

Therefore, the correct option is d. debit memorandum that decreases the account balance.