Fundamentals Of Accountancy, Business, And Management (FABM) 2 Practice Exam

Which term refers to a bank entry that lists charges deducted from the depositor's account?

Bank service charges Credit memo Debit memo NSF

Correct Answer:

Debit memo

Explanation:

A debit memo is the bank entry that lists charges deducted from the depositor’s account. It’s the bank’s notice that funds have been debited, reducing the balance—often including items like bank service charges, ATM fees, or checks returned. In bank reconciliation, this document explains why the bank’s reported balance decreases, and it contrasts with a credit memo, which increases the balance. NSF indicates non-sufficient funds for a particular item, which is a specific debit cause, but not the general term for the entry itself.

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