Access over 20 million homework & study documents


ACC 281 Week 2 Dq 1






Showing Page:
ACC 281 Week 2 Dq 1
What effect does a debit memo in a bank
statement have on the Cash account?
A bank debit memo is an entry on the bank
statement refers to a deduction from the account’s
balance. Edmonds (2010) explains, “Since a
checking account is an asset (cash) to the
depositor, a bank statement debit memo requires a
credit entry to the cash account on the depositors
books”. (p. 145). For example, any time I use my
debit card, the amount is applied directly to my
checking account subtracting the amount from my
available balance. If a debit memo in the amount
of $50 for bank fee such as insufficient funds, it
decreases the balance by $50. The businesses
cash account should be credited since the
businesses asset account was reduced.
What effect does a credit memo in a bank
statement have on the Cash account?

Sign up to view the full document!

lock_open Sign Up
A credit memo is the opposite of the debit memo
because it is a type of transaction that increases or
adds money to the account. According to
Edmonds (2010), “Bank statement credit memos
describe activities that increase the customers
account balance (the bank’s liability) (p. 145). For
example, every two weeks, my work directly
deposits my paycheck into my bank account
therefore increasing my bank account balance.
Edmonds (2010) states, “When a bank tells you
that it has credited your account, you will debit
your cash account in response” (p. 145). Credit
memos can occur from a number of reasons such
as interest from bank loans or can even be from a
bank error or a refund.
Edmonds, T. Survey of Accounting, 2nd Edition
(2nd ed). McGraw-Hill Primis Custom Publishing.

Sign up to view the full document!

lock_open Sign Up
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

I was stuck on this subject and a friend recommended Studypool. I'm so glad I checked it out!