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A standing Order of $25 for insurance appears in the debit column of the Bank Statement. This amount does not appear in the Cash Book. How is this item treated in order to update the Cash Book.

a. Substract the $25 from the Bank Statement balance
b. Add $25 to the Bank Statement balance
c. Credit the Bank Account with $25
d. Debit the Bank Account with $25

Respuesta :

Parrain

Answer: c. Credit the Bank Account with $25

Explanation:

Insurance is an expense which means that the Standing Order reduced the amount of cash that the company had in the bank and this was reflected by the bank statement.

In order to reconcile the bank statement balance to the bank account balance, the bank account balance needs to be reduced as well. As it is an asset, it will be reduced by crediting it for the $25 standing order.

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