PRC-1 · Chapter 9 · Question 98 of 100
To adjust for a cheque that was returned marked 'NSF' (Not Sufficient Funds) by the bank, the accountant must:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Credit the cash book
Explanation
An NSF cheque is a dishonoured cheque. The initial receipt (debit) was invalid, so the cash book must be credited to reverse the transaction and reduce the bank balance.
More Bank Reconciliations MCQs
- Q100Reconciling items like unpresented cheques and uncleared lodgements in a Bank Reconciliation Statement are naturally cleared when:
- Q1What is the primary purpose of preparing a Bank Reconciliation Statement (BRS)?
- Q2If a bank statement shows a 'Debit' balance, what does this signify for the business?
- Q3Which of the following describes a credit balance in the bank column of the cash book?
- Q4Which of the following items is NOT required to be adjusted in the revised/adjusted cash book?