Which one of the statements below is true? -Both deposits in transit and outstan

Question

Which one of the statements below is true?

-Both deposits in transit and outstanding checks are deducted from the balance per the bank statement during the bank reconciliation process.

-The deposits in transit are added to the balance per the bank statement, and outstanding checks are deducted from the balance per the bank statement during the bank reconciliation process.

-Deposits in transit are deducted from the balance per the bank statement, and outstanding checks are added to the balance per the bank statement during the bank reconciliation process.

-Both deposits in transit and outstanding checks are added to the balance per the bank statement during the bank reconciliation process.

Explanation / Answer

Deposits in transit are added back whereas outstanding checks are deducted

this is because deposits increase the balance and outstanding checks are deduction hence at year end to calculate the adjusting balance we need to make the said changes

option 2

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