Bank statements record bank-processed debits and credits

Steps:

• Bank statements list transactions the bank has directly handled, such as payments and fees.
• Entry 1 (cheque to supplier): Bank debits account when cheque is presented and paid.
• Entry 2 (cheque from customer): Business receives and records it internally; bank only credits upon deposit and clearance, so not yet a bank statement entry.
• Entry 3 (standing order rent): Bank automatically debits for the payment.
• Entry 4 (bank charges): Bank deducts fees directly from the account.

Why A is correct:

• A selects 1, 3, and 4, matching transactions the bank processes and records as debits per standard banking procedures.

Why the others are wrong:

• B omits 4, but bank charges are direct bank debits.
• C limits to 1, excluding 3 and 4, both bank-initiated.
• D picks only 2, which is a business receipt, not a bank-processed entry.

Final answer: A