A bank charge of $5000 was omitted from the cash book entry. What is the appropriate correction to be made in the cash book?

Show Answers

Record the bank charges as a debit entry in the cash bookIncrease the cash book balance by the amount of bank chargesEnter the bank charges as a credit in the cash bookNo modification is required in the cash bookNot applicable

Explanation

Bank charges represent an expense that reduces the cash balance, so they should be recorded as a credit entry in the cash book to reflect the deduction. Debiting or adding the charges to the balance would be incorrect, and ignoring the adjustment would lead to inaccurate cash records.