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  3. debit memos from a bank reduce a depositor's cash

Debit memos from a bank reduce a depositor's cash balance, and credit memos increase the...

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Accounting

Debit memos from a bank reduce a depositor's cash balance, and credit memos increase the balance. This seems backwards from the normal debit-and-credit rules. What is the explanation?

  • From a banks perspective, customers deposits are liabilities.
  • Banks are required to guarantee the safety of all customer deposits.
  • Bank accounting practices were created in 1943, before the debit-and-credit rules were adopted.
  • State banking regulations require banks to use different accounting practices.

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