Cash Control Systems Chapter Five. Terms Code of conduct Checking account Endorsement Blank...

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

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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

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3344

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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

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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

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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

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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