Cash Control and Banking Activities Making Accounting Relevant Businesses deposit all cash and checks into a bank account and make payments using checks. This policy helps to protect cash from loss or theft. Making Accounting Relevant Businesses deposit all cash and checks into a bank account and make payments using checks. This policy helps to protect cash from loss or theft. What other benefit does a business gain from the use of a checking account?

Section 1Banking Procedures What You’ll Learn  What controls a business uses to protect cash and why these controls are needed.  To complete forms used to open a checking account.  To record information on check stubs.  To prepare a check correctly. What You’ll Learn  What controls a business uses to protect cash and why these controls are needed.  To complete forms used to open a checking account.  To record information on check stubs.  To prepare a check correctly.

Why It’s Important Cash is a valuable asset. It must be protected and processed properly. Why It’s Important Cash is a valuable asset. It must be protected and processed properly. Section 1Banking Procedures (con’t.) Key Terms  internal controls  external controls  checking account  check  depositor  signature card  deposit slip Key Terms  internal controls  external controls  checking account  check  depositor  signature card  deposit slip  endorsement  restrictive endorsement  payee  drawer  drawee  voiding a check  endorsement  restrictive endorsement  payee  drawer  drawee  voiding a check

Protecting Cash It is important to protect cash from loss, waste, theft, forgery, and embezzlement. Protecting Cash It is important to protect cash from loss, waste, theft, forgery, and embezzlement. Section 1Banking Procedures (con’t.)

Protecting Cash (con’t.) 1.Limit the number of persons handling cash. 2.Separate accounting tasks involving cash. 3.Bond (insure) employees who handle cash or cash records. 4.Use a cash register and a safe. 5.Deposit cash receipts in the bank daily. 6.Use checks to make all cash payments. 1.Limit the number of persons handling cash. 2.Separate accounting tasks involving cash. 3.Bond (insure) employees who handle cash or cash records. 4.Use a cash register and a safe. 5.Deposit cash receipts in the bank daily. 6.Use checks to make all cash payments. Section 1Banking Procedures (con’t.) INTERNAL CONTROLS

Protecting Cash (con’t.) 1.Verify signatures on checks. 2.Maintain records of transactions. 1.Verify signatures on checks. 2.Maintain records of transactions. Section 1Banking Procedures (con’t.) EXTERNAL CONTROLS

Opening a Checking Account  Allows a person or business to deposit cash in a bank and to write checks against the account balance.  A signature card contains the signature(s) of the person(s) authorized to write checks on the account.  Printed checks are packaged together in checkbooks.  Allows a person or business to deposit cash in a bank and to write checks against the account balance.  A signature card contains the signature(s) of the person(s) authorized to write checks on the account.  Printed checks are packaged together in checkbooks. Section 1Banking Procedures (con’t.)

Making Deposits to a Checking Account Businesses make regular deposits to protect the currency, coins, and checks received. Section 1Banking Procedures (con’t.)

Endorsing Checks To deposit the check in a checking account, the depositor endorses the check to transfer ownership to the bank. An endorsement is an authorized signature written or stamped on the back of a check representing a promise to pay. To deposit the check in a checking account, the depositor endorses the check to transfer ownership to the bank. An endorsement is an authorized signature written or stamped on the back of a check representing a promise to pay. Section 1Banking Procedures (con’t.)

Recording Deposits in the Checkbook Section 1Banking Procedures (con’t.) Deposits New Balance Deposits New Balance

Writing Checks Section 1Banking Procedures (con’t.) Enter new balanceSign the check Enter amountEnter dollar amount in words Enter new balanceSign the check Enter amountEnter dollar amount in words Enter amount Enter dateEnter payee Enter payee Enter date Enter purpose Enter amount Enter amount Enter dateEnter payee Enter payee Enter date Enter purpose Enter amount

Voiding a Check Section 1Banking Procedures (con’t.) Writing the word “Void” in large letters across the front of a check (in ink) is known as voiding a check.

Check Your Understanding Cash is protected through internal controls and external controls. Describe controls over cash. Section 1Banking Procedures (con’t.)