CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 5-1 Checking Accounts

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 5-1 CASH TRANSACTIONS Most business make major cash payments by check Smaller payments (postage & supplies) with petty cash Most recording errors affect cash Cash transactions occur most frequently Need written evidence of cash transactions taking place Can compare cash transactions with bank records Code of conduct A statement that guides the ethical behavior of a company and its employees page 123

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning CHECKING ACCOUNTS A bank account from which payments can be ordered by a depositor When account is opened, the bank customer must provide a signature on a signature card for the bank records A bank customer prepares a deposit slip each time cash or checks are placed in a bank account Checks are listed according to the bank routing number When deposit is made, a bank gives the depositor a receipt Many banks use a copy of the deposit slip with a printed or stamped verification as the receipt 3 LESSON 5-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 5-1 DEPOSITING CASH page 119

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning DEPOSIT RECORDED ON A CHECK STUB Check stubs are used to keep track of transactions and the current balance in bank accounts After deposits are made at the bank, bank customers record the deposit onto the check stub A subtotal is then calculated 5 LESSON 5-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 5-1 DEPOSIT RECORDED ON A CHECK STUB page 119

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning ENDORSEMENT A signature or stamp on the back of a check transferring ownership This is done by signing the back of the check Should be signed exactly as the person’s name appears on the front of the check Ownership can be transferred multiple times Each individual can be held individually liable for the amount of the check 7 LESSON 5-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning TYPES OF ENDORSEMENTS Blank endorsement An endorsement consisting only of the endorser’s signature Only used right before it is cashed or deposited at the bank Special endorsement An endorsement indicating a new owner of a check Use “Pay to the order of” and the name of the new owner Original owner signs below the new owner’s name Restrictive endorsement An endorsement restricting further transfer of a check’s endorsement Use “For Deposit Only” 8 LESSON 5-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 5-1 ENDORSEMENTS page 120 Blank Endorsement Special Endorsement Restrictive Endorsement

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 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 STUB page

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 5-1 COMPLETED CHECK 7.Write the date. page 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.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON Record the date. 2.Write the word VOID in the Account Title column 3.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 CHECK page