Bank sent debit advice of $500 to company being interest on overdraft. It wasn't entered in cash book. Identify the correct adjustment in cash book.
Correct answer: B. $500 will be credited
- A. $500 will be debited
- B. $500 will be credited
- C. Non-adjustable
- D. $1000 will be subtracted
Explanation
A bank debit advice means the bank has reduced the company's account, so the same reduction must be recorded by crediting the bank column of the cash book by $500.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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