Answer to Question #263201 in Accounting for nicole

Question

TOPIC: BANK RECONCILIATION

 

Directions: Research for the following questions and answer concisely using less than 5 sentences for each response.

1. Why are NFS Checks considered a debit memo?

2. Is a certified check considered to be an outstanding check?

Answer 1

Solution:

1.). NFS Checks are considered a debit memo because they reflect deductions on the bank statement. NFS checks are bounced checks that were not paid to customers due to insufficient funds.

 

2.). A certified check is not considered to be an outstanding check. When preparing a bank reconciliation statement, a certified check is not considered outstanding since both the bank and the company are aware of it. Once certified, a check becomes a bank's obligation and is paid out of the bank.