Practice prompt · Q:receivables-notes-credit-losses-and-transfers/bank-reconciliation-sides-001

Decide which side each reconciling item belongs on

Tests whether the learner separates timing differences from items the entity has not yet recorded.

Updated Sep 11, 2026 Review due Nov 18, 2026

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A December 31 reconciliation shows a deposit in transit, three outstanding checks, a customer check returned for insufficient funds, and a monthly service charge.

One rule sorts every item: whoever has not yet recorded it is the side that adjusts. The bank side clears itself; the book side needs an entry before the ledger balance is right.

Choose the best answer. a The deposit and the checks adjust the bank balance with no entry; the returned check and the service charge adjust the book balance and each needs an entry. b All four adjust the book balance, and each requires a journal entry. c All four adjust the bank balance, and none requires a journal entry. d The deposit and the returned check adjust the bank balance; the outstanding checks and the service charge adjust the book balance.

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Answer: a

Choice a. Only book-side items generate entries, because only they represent transactions the entity has not recorded.