1. Cash Control and Banking Activities
Chapter 11 $
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. $ $

2. $ $ $ $ Why It’s Important Key Terms Chapter 11 internal controls
Section 1 Banking Procedures (cont'd.)
Chapter 11 $
Why It’s Important
Cash is a valuable asset. It must be protected and processed properly. $
Key Terms
internal controls
external controls
checking account
check
depositor
signature card
deposit slip
endorsement
restrictive endorsement
payee
drawer
drawee
voiding a check $ $

3. Section 1 Banking Procedures (cont'd.)
Chapter 11 $
Protecting Cash
It is important to protect cash from loss, waste, theft, forgery, and embezzlement. $ $ $

4. INTERNAL CONTROLS – performed by the business
Section 1 Banking Procedures (cont'd.)
Chapter 11 $
Protecting Cash (cont'd.)
INTERNAL CONTROLS – performed by the business $
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. $ $

5. EXTERNAL CONTROLS – performed by the bank
Section 1 Banking Procedures (cont'd.)
Chapter 11 $
Protecting Cash (cont'd.) $
EXTERNAL CONTROLS – performed by the bank
1. Verify signatures on checks.
2. Maintain records of transactions. $ $

6. $ $ $ $ Opening a Checking Account Chapter 11
Section 1 Banking Procedures (cont'd.)
Chapter 11 $
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. $ $ $

7. $ $ $ $ Making Deposits to a Checking Account Chapter 11
Section 1 Banking Procedures (cont'd.)
Chapter 11 $
Making Deposits to a Checking Account
Businesses make regular deposits to protect the currency, coins, and checks received. $
List checks by ABA#
Business’s account # at bank $
Oct. 15 $

8. Restrictive Endorsement
Section 1 Banking Procedures (cont'd.)
Chapter 11 $
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.
See other endorsements: $ $
Restrictive Endorsement $

9. $ $ $ $ Recording Deposits in the Checkbook Chapter 11
Section 1 Banking Procedures (cont'd.)
Chapter 11 $
Recording Deposits in the Checkbook $ $
Deposits with dates
New Balance
after deposits but before check 103 is written $

10. Chapter 11
Checks – check stub completed top and balance before check is filled out.

11. $ $ $ $ Writing Checks – complete check stub first Chapter 11
Enter amount
Enter payee
Enter purpose
Enter new balance
Enter date $ $ $

12. $ $ $ $ Writing Checks Chapter 11
Section 1 Banking Procedures (cont'd.)
Chapter 11 $
Writing Checks
Bank is the drawee
Enter payee $
Enter date
Enter amount $ $
Enter dollar amount in words
Drawer signs check

13. Chapter 11 $
ABA number
ABA # $ $ $

14. Chapter 11 Top right corner of check: ABA numbers:
# to left of - identifies the city the bank is located in (71)
# to right of – identifies the name of the bank (627)
# below line identifies the Federal Reserve district the bank is located in (3222)
Bottom left of check bottom:
ABA numbers – Account Number – Check number:

15. $ $ $ $ Writing a check Chapter 11 Write legibly Use a pen
Write all numbers the same size
Spell out the amount in words and draw the line $ $ $

16. $ $ $ $ Voiding a Check Chapter 11
Section 1 Banking Procedures (cont'd.)
Chapter 11 $
Voiding a Check $
Writing the word “Void” in large letters across the front of a check (in ink) is known as voiding a check. $ $

17. $ $ $ $ Why It’s Important Key Terms Chapter 11 bank statement
Section 2 Reconciling the Bank Account
Chapter 11 $
Why It’s Important
Reconciling the bank account ensures that a business owner is aware of all transactions that affect cash. $
Key Terms
bank statement
canceled checks
reconciling the bank statement
outstanding checks
outstanding deposits
bank service charge
stop payment order
NSF check
electronic funds transfer system (EFTS) $ $

18. $ $ $ $ Proving Cash Chapter 11 General Ledger “Cash in Checkbook =
Section 2 Reconciling the Bank Account (cont'd.)
Chapter 11 $
Proving Cash $
General Ledger “Cash in
Bank” account
Checkbook
Balance = $ $
Reasons they might not agree:
Math error in checkbook
Omission of check or deposit in checkbook
Mistake in copying balance forward in checkbook

20. $ $ $ $ The Bank Statement Chapter 11
Section 2 Reconciling the Bank Account (cont'd.)
Chapter 11 $
The Bank Statement
A bank statement is an itemized record of all the transactions in a depositor’s account over a given period, usually a month. $ $ $

21. $ $ $ $ The Bank Statement (cont'd.) Chapter 11
Section 2 Reconciling the Bank Account (cont'd.)
Chapter 11 $
The Bank Statement (cont'd.)
Beginning balance
Ending balance $ $ $
Checks paid by bank
(cancelled checks)
Other
deductions
Deposits into
the account

22. $ $ $ $ Reconciling a Bank Statement Chapter 11
Section 2 Reconciling the Bank Account (cont'd.)
Chapter 11 $
Reconciling a Bank Statement
Documents the differences between the bank balance and the checkbook balance. $ $ $

23. $ $ $ $ Recording Bank Service Charges Chapter 11
A bank service charge is an expense that is recorded in the accounting records. $
Less: Serv Chg
21,
No. 107 $
JOURNAL ENTRY $

24. $ $ $ $ Other bank reconciliation items Chapter 11
Section 2 Reconciling the Bank Account (cont'd.)
Chapter 11 $
Other bank reconciliation items
NSF Check (Insufficient funds)
NSF Check fee
Stop payment order
Electronic Funds Transfer (EFT) $ $ $