What is the term for a status of a checking account that does not have enough money to cover transactions?

• A. NSF (No Sufficient Funds)
• B. Time Lags or Timing Differences
• C. Credit memo
• D. Post dated check

Answer: (A)

When a checking account has less money than the amount of a transaction, the item is described as Non-Sufficient Funds, commonly abbreviated NSF. This means the bank will not honor the payment because there aren’t enough funds to cover it. As a result, the item is returned or “bounced,” which can lead to fees and the merchant not receiving payment until the funds are available.

Time lags or timing differences refer to delays in posting transactions, not to insufficient funds. A credit memo is an adjustment that increases a balance, not a failed payment. A post-dated check is dated for a future day and isn’t payable yet.