The proper treatment on the bank reconciliation of an NSF cheque of a customer that is returned with the bank statement is to show it as a(an) _________.

addition per book balance of cash

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deduction per book balance of cash

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addition per bank statement balance

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deduction per bank statement balance

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Solution

The correct option is C deduction per book balance of cash
A cheque is marked as 'NSF' when it is issued by the business to a supplier or creditors, but there are 'Not sufficient funds' in the bank account to make the payment. So, the proper treatment on bank reconciliation of an NSF cheque that is returned with the bank statement is to show it as a deduction per book balance of cash as it was added before when it was received for payment from the customer.

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