Question

What impact will a Deposit in Transit and an Outstanding Check have on a company's accounting records after a reconciliation is completed? (will cash have to increase or decrease based on the reconciling item)

Answer 1

A deposit in transit will increase the company's cash balance after the reconciliation, while an outstanding check will decrease the cash balance.

Step-by-step explanation:

After a reconciliation is completed, a deposit in transit and an outstanding check will have opposite impacts on a company's accounting records.

A deposit in transit is a deposit that has been made by the company but has not yet been recorded by the bank. Therefore, the deposit in transit will increase the company's cash balance after the reconciliation.

An outstanding check is a check that has been issued by the company but has not yet been presented to the bank for payment. Therefore, the outstanding check will decrease the company's cash balance after the reconciliation.