Cash Control Systems



Major cash payments made in checks
Small cash payments made out of small cash
fund/petty cash
Cash transactions occur frequently



Errors
Lost
Transferred to unauthorized individuals



Checking Account-A bank account from which
payments can be ordered by a depositor
Authorized signers for a checking account
must sign signature card
Deposit Slip-A bank form which lists the
checks, currency, and coins an account holder
is adding to the bank account





Endorsement- A signature or stamp on the
back of a check transferring ownership
Federal regs state signature has to be in limited
space on back of check
Blank Endorsement- Consists only of the
endorser’s signature
Special Endorsement – Indicating a new owner
of a check-Pay to the order of
Restrictive Endorsement- For deposit only



Checks # in order
Concept: Objective Evidence- Check stub is
source document
COMPLETE CHECK STUB 1ST!




Banks refuse altered checks
Voided Check- A check that cannot be
processed because the maker has made it
invalid
Write VOID in large letters across check
Place entry in journal
Bank Reconciliation




Bank Statement- A report of deposits,
withdrawals, and bank balances sent to a
depositor by a bank
Canceled check- a check which has been paid
by the bank
Outstanding Checks- Checks written but not
cleared through the bank
Outstanding Deposits-Deposits made too late
to appear on the statement
BANK STMT BAL.
+ Outstanding Deposits
Outstanding Checks
New Balance
=
CHECK STUB BALANCE
-
Service Charge
New Balance


Must write service charge on next check stub
Must write entry to record service chargealways Miscellaneous Expense
Dishonored Checks and Electronic
Banking






Dishonored Check-A check that a bank refuses
to pay
NSF Check- A check dishonored by the bank
because of insufficient funds in the account of
the maker of the check
Bank will charge depositor a fee for handling
NSF check
Remove from cash and place back in A/R
Write on check stub
Write journal entry


Electronic Funds Transfer- A computerized
cash payments system that transfers funds
without the use of checks, currency, or other
paper documents
Electronic payment is still a cash paymentcheck is not source document



Debit Card- A bank card that automatically
deducts the amount of a purchase from the
checking account of the cardholder
Debit card automatically deducts from
checking
Using a debit card is a cash payment-Check is
not source document
Petty Cash



Petty Cash- An amount of cash kept on hand
and used for making small payments
Petty cash is an asset-normal balance sides of
an asset
Petty cash slip- A form showing proof of a
petty cash payment





Petty cash must be replenished
Create a petty cash report to verify amounts
paid out.
Errors can be made between cash paid out and
actual amount on hand
Cash Short- A petty cash on hand amount that
is less than the recorded amount
Cash Over- A petty cash on hand amount that
is more than the recorded amount


Must fill out report and write entry
Cash Over and Short has no normal balance
side
Most often cash is short
 Usually classified as an expense
