Future Business Leaders of America (FBLA) Accounting Practice Test

What term refers to deposits made and recorded in the checkbook but not appearing on the bank statement?

1. Outstanding deposits

2. Inventory

3. Electronic funds transfer

4. Merchandising business

The correct answer is: Outstanding deposits

The term that refers to deposits made and recorded in the checkbook but not appearing on the bank statement is outstanding deposits. These are transactions that a business or individual has noted in their records, indicating that the money has been deposited, but the bank has not yet processed the transaction, so it does not yet show up on the bank statement. Understanding this concept is crucial for accurately reconciling bank statements. When preparing a bank reconciliation, outstanding deposits must be accounted for because they represent funds that are technically available to the business despite not being reflected in the bank’s records at a given time. This helps ensure that the checkbook balance and the bank statement balance align over time. In contrast, other terms provided do not pertain to bank reconciliations or deposits specifically. Inventory refers to goods available for sale, electronic funds transfer involves the electronic movement of money, and merchandising business relates to businesses that sell goods. None of these concepts address the specific situation of banking transactions like outstanding deposits do.