FAR SIM

Question 1

If a check bounces due to nonsufficient funds, will the company need to ADD or SUBTRACT that amount from the General Ledger during a Bank Reconciliation?

Answer 1

SUBTRACT IT
This is because they added that money to the general ledger, thinking the check would go through. But, when the check bounces, the company has to reverse or subtract that amount back out of the general ledger.

Question 2

If a company voids a check before it is cashed, will the company need to ADD or SUBTRACT that amount from the General Ledger during a Bank Reconciliation?

Answer 2

ADD IT
This is because they subtracted that money from the general ledger, thinking the check would be cashed. But, when then they void the check, so the company has to reverse or add that amount back to the general ledger.