What are nonsufficient checks and how are they reflected in a bank reconciliation?
A nonsufficient (NSF) check occurs when a customer writes a check to the company and the bank realizes that the check bounced because the customer doesn’t have sufficient funds in their account. The issue is that the company thinks that the check is valid and that they have received full payment, however, it can be several days later before the bank realizes that the check bounced. The NSF check is not reflected in the bank balance and the company needs to reduce the balance per bank for the NSF check since it doesn’t represent a valid payment.
For example, if you write a check for $100, and your bank account only has $75, then the check will bounce when the company goes to deposit it!
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