Asked by Ashley Scott on Jun 17, 2024
Verified
A debit or credit memo describing entries in the company's bank account may be enclosed with the bank statement. An example of a credit memo is
A) deposited checks returned for insufficient funds
B) collection of a promissory note
C) a service charge
D) notification that a customer's check for $375 was recorded by the company as $735 on the deposit ticket
Promissory Note
An economic device featuring a documented pledge from one side to transfer a predetermined amount of funds to the other, upon request or at a certain future time.
Insufficient Funds
A situation where an account does not have enough money to cover withdrawals or transactions, often leading to fees or declined transactions.
Credit Memo
A document issued by a seller to a buyer, reducing the amount the buyer owes to the seller under the terms of an existing invoice, often due to a return or a rebate.
- Distinguish between different types of documents, including remittance advice and credit memos, and their significance in the processes of banking and accounting.
Verified Answer
CP
Christina PerryJun 18, 2024
Final Answer :
B
Explanation :
A credit memo represents an increase in the company's bank balance, such as the collection of a promissory note. A, C, and D are examples of debit memos, representing decreases in the company's bank balance.
Learning Objectives
- Distinguish between different types of documents, including remittance advice and credit memos, and their significance in the processes of banking and accounting.