In the context of bank reconciliation, which of the following accounts does NOT appear on the balance sheet?

• A. Accounts Receivable
• B. Outstanding Checks
• C. Bank Service Charges
• D. Cash

Answer: (B)

Verified step by step guidance

1. Understand the context of the problem: Bank reconciliation is the process of comparing the bank statement balance with the company's cash account balance to identify discrepancies and make adjustments.
2. Review the accounts listed in the problem: Accounts Receivable, Outstanding Checks, Bank Service Charges, and Cash. Determine which of these accounts typically appear on the balance sheet.
3. Recall that the balance sheet includes assets, liabilities, and equity. Accounts Receivable and Cash are asset accounts and therefore appear on the balance sheet.
4. Understand that Outstanding Checks are not an account but rather a reconciling item in the bank reconciliation process. They represent checks issued by the company that have not yet cleared the bank and do not appear on the balance sheet.
5. Recognize that Bank Service Charges are an expense and are recorded on the income statement, not the balance sheet. Therefore, the correct answer is Outstanding Checks, as it is not an account and does not appear on the balance sheet.