cash control systems chapter five. terms code of conduct checking account endorsement blank...
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Cash Control Systems
Chapter Five
Terms
Code of conduct Checking account Endorsement Blank endorsement Special endorsement Restrictive
endorsement Postdated check
Bank Statement Dishonored Check Electronic Funds
Transfer Debit Card Petty Cash Petty Cash Slip
Books - A - Million
Customers use cash and credit cards to make purchases– What control problems may occur when
employees except cash for sales? Where do you work –
– What control systems do you have?
Section 1: Checking Accounts
Cash transactions occur more frequently than other types of transactions– more chances occur to make recording errors
Cash can be transferred from one person to another without any questions about ownership
Cash could also be lost from one place to another
Safety Measures
Cash in the bank All Cash receipts are placed in the bank
– Evidence to support accounting records– Compare record of checks with bank statements
Code of conduct:– Statement that guides the ethical behavior of a
company and its employees. Example p. 118
Depositing Cash
Business from ordering a bank to pay cash from a bank account is a check.
Checking account – bank account from which payments can be ordered
– Signature on card Deposit slip is prepared by a customer each time
cash or checks are placed in an account.– Checks listed on slip by routing number– Receipt given– Record deposit on check stub
DEPOSITING CASHpage 119
DEPOSIT RECORDED ON A CHECK STUB
page 119
Lets Talk About Endorsements!
Endorsement – signature or stamp on the back of a check transferring ownership– Blank (just initial owners signature)
If lost with this anyone can cash the check– Special (indicates a new owner)– Restrictive (restricts further transfer)
Examples page 120
ENDORSEMENTSpage 120Blank Endorsement
Special Endorsement
Restrictive Endorsement
Completing Check Stub & Check
Example p. 121 Postdated check – most banks will not
accept postdated checks because money cannot be drawn until that date.
Check writing habits Recording a voided check
5. Write the amount of the check.
2. Write the date of the check.
3. Write to whom the check is to be paid.
4. Record the purpose of the check.
1. Write the amount of the check.
6. Calculate the new checking account balance.
COMPLETED CHECK STUBpage 121
11223344
55
66
COMPLETED CHECK
7. Write the date.
page 121
10. Write the amount in words.8. Write to whom the check
is to be paid.
9. Write the amount in figures.
11. Write the purpose of the check.
12. Sign the check.
1. Record the date.2. Write the word VOID in the Account Title
column3. Write the check number.4. Place a check mark in the Post. Ref. column.
5. Place a dash in the Cash Credit column.
RECORDING A VOIDED CHECKpage 122
1122
3344
55
TERMS REVIEW
code of conduct checking account endorsement blank endorsement special endorsement restrictive endorsement postdated check
page 123
Practice
Working Together On Your Own
Review Quiz
1. Why are cash control systems needed?2. What is an endorsement - hint what does it do?
(not a signature on the back of a check)3. List the three types of endorsements?4. What is a postdated check and how do banks feel
about them?5. What is all included on a check stub?6. What type of endorsement includes pay to the
order of?7. What type of endorsement includes only an
individuals name?8. What type of endorsement includes for deposit
only?
Section 5:2 Bank Reconciliation
Bank statement – report of deposits, withdrawals, and bank balances sent to a depositor by a bank
Bank records and depositor’s records may differ for several reasons:– Service charge– Outstanding deposits– Outstanding checks– Math errors
Bank Reconciliation
Verifying that the information on a bank statement agrees with the checkbook
Reconciling immediately is very important in cash control
Example – p. 125 Recording service charge on check stub Journalizing a bank service charge
BANK STATEMENT
page 124
5.Bank Statement Balance
BANK STATEMENT RECONCILIATION
1122
33
44
55
66
77
8899
9.Adjusted Bank Balance
page 125
2.Check Stub Balance
10. Compare Adjusted Balances
1.Date
3.Service Charge4.Adjusted Check Stub Balance
6.Outstanding Deposits7.Subtotal8.Outstanding Checks 1010
1. Write Service Charge $8.00 on the check stub under the heading “Other.”
RECORDING A BANK SERVICE CHARGE ON A CHECK STUB page 126
11 22
33
2. Write the amount of the service charge in the amount column.
3. Calculate and record the new subtotal on the Subtotal line.
JOURNALIZING A BANK SERVICE CHARGE
1. Date. Write the date.
page 127
11 3344
August 31. Received bank statement showing August bank service charge, $8.00. Memorandum No. 3.
22
2. Debit. Write the title of the account to be debited. Record the amount debited.
3. Credit. Record the amount credited.
4. Source document. Write the source document number.
TERM REVIEW
bank statement
page 128
Practice
Working Together On Your Own Application Problems 1-2
Review
Code of conduct Checking account Endorsement Blank Endorsement Special Endorsement Restrictive
Endorsement Postdated check
Preparing a check stub Preparing a check Purpose of bank
reconciliation Reflection on Jig saw
Section 5:3 – Dishonored Checks & Electronic Banking
Check the bank refuses to pay– Insufficient funds to pay the check– Check appears to be altered– Signature does not match– Figures and words do not agree– Postdated– Person stopped payment
Illegal/ credit Fee
Section 5:3 Journalizing Dishonored Check, Electronic Funds Transfer, & Debit Card Transactions
Make the book up to date See page 130 Working Together Electronic Funds Transfer – transfers funds
without the use of checks– Password / cash control
Debit Card
Petty Cash
Amount of cash left on hand– Used for making small payments– Assets– Normal balance = debit
Petty cash slip – from showing the purpose and amount of payment – PROOF– Slip number, date, to whom, reason, amount,
account and signature
Replenishing Petty Cash
Working Together Applications 3-5 Homework Challenge Problem
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