___________ refer to checks written by a company that have not been cleared by the bank
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Answer: C. Outstanding checks
Explanation
Outstanding checks are checks issued by the business that have not yet been presented to and paid by the bank. Because the issuer has subtracted the amount from their cash book, a temporary timing difference occurs until the bank processes the payment. This is a common item found during bank reconciliations. When a company writes a check to a vendor, it immediately credits its cash book balance. However, the vendor may take days or weeks to deposit the check, meaning the bank statement has not yet reflected the withdrawal. These un-cleared instruments are termed outstanding checks.
A business mails a rent check to its landlord on the last day of the month, but the landlord deposits it the following week. This check remains outstanding on the end-of-month bank reconciliation statement. Uncollected checks refer to customer deposits that have not yet cleared or been collected by the bank. Uncredited checks are deposits submitted to the bank but not yet added to the account balance. Bounced checks are returned instruments due to insufficient funds.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
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Q4. _________ represent checks submitted to the bank that have not yet been credited to the account.
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Answer: B. Uncredited checks
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Q6. If a bank returns a check with an "NSF" designation, it indicates that:
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Answer: B. There are not sufficient funds in your account
NSF stands for not sufficient funds, meaning the check was returned because the account did not hold enough money to cover it. When a customer's check bounces for this reason, the bank refuses payment and charges a fee....