Asked by stefan quintana on Jun 13, 2024
Verified
What entry is required in the company's accounts to record outstanding checks?
A) debit Accounts Receivable; credit Cash
B) debit Cash; credit Accounts Receivable
C) debit Cash; credit Accounts Payable
D) no entry required
Outstanding Checks
These refer to checks that have been written and recorded in the accounting records but have not yet cleared the bank account.
Accounts Receivable
Financial obligations of customers towards a business for items or services offered, payable later.
Accounts Payable
Liabilities to creditors that represent amounts the company owes for purchases made on credit.
- Understand the treatment of outstanding checks and deposits in transit in bank reconciliations.
Verified Answer
CE
Claudia EsthakyJun 19, 2024
Final Answer :
D
Explanation :
Outstanding checks are checks that have been written by the company but have not yet been cashed or cleared by the bank. They do not require an entry in the company's accounts because they have already been recorded when the check was initially written. The outstanding status affects the bank reconciliation process but does not alter the company's general ledger accounts.
Learning Objectives
- Understand the treatment of outstanding checks and deposits in transit in bank reconciliations.