Cash Control Systems
Chapter Five
Terms
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Code of conduct
Checking account
Endorsement
Blank endorsement
Special endorsement
Restrictive
endorsement
Postdated check
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Bank Statement
Dishonored Check
Electronic Funds
Transfer
Debit Card
Petty Cash
Petty Cash Slip
Books - A - Million
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Customers use cash and credit cards to
make purchases
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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
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Cash transactions occur more frequently
than other types of transactions
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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
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Cash in the bank
All Cash receipts are placed in the bank
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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
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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
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Signature on card
Deposit slip is prepared by a customer each time
cash or checks are placed in an account.
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Checks listed on slip by routing number
Receipt given
Record deposit on check stub
page 119
DEPOSITING CASH
DEPOSIT RECORDED ON A
CHECK STUB
page 119
Lets Talk About Endorsements!
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Endorsement – signature or stamp on the
back of a check transferring ownership
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Blank (just initial owners signature)
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If lost with this anyone can cash the check
Special (indicates a new owner)
Restrictive (restricts further transfer)
Examples page 120
Blank Endorsement
page 120
ENDORSEMENTS
Special Endorsement
Restrictive Endorsement
Completing Check Stub & Check
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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
page 121
COMPLETED CHECK STUB
1
2
3
4
6
1. 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.
5. Write the amount of the
check.
5 6. Calculate the new
checking account
balance.
page 121
COMPLETED
CHECK
7. Write the date.
8. Write to whom the check
is to be paid.
9. Write the amount in
figures.
10. Write the amount in
words.
11. Write the purpose of the
check.
12. Sign the check.
page 122
RECORDING A VOIDED CHECK
2
1
4
3
1. 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.
5
page 123
TERMS REVIEW
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code of conduct
checking account
endorsement
blank endorsement
special endorsement
restrictive endorsement
postdated check
Practice
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Working Together
On Your Own
Review Quiz
1.
2.
3.
4.
5.
6.
7.
8.
Why are cash control systems needed?
What is an endorsement - hint what does it do?
(not a signature on the back of a check)
List the three types of endorsements?
What is a postdated check and how do banks feel
about them?
What is all included on a check stub?
What type of endorsement includes pay to the
order of?
What type of endorsement includes only an
individuals name?
What type of endorsement includes for deposit
only?
Section 5:2 Bank Reconciliation
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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:
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Service charge
Outstanding deposits
Outstanding checks
Math errors
Bank Reconciliation
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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
page 124
BANK STATEMENT
1. Date
2. Check Stub
Balance
BANK STATEMENT
RECONCILIATION
3. Service Charge
4. Adjusted Check
Stub Balance
3
5. Bank Statement
Balance
6. Outstanding
Deposits
7. Subtotal
8. Outstanding
Checks
9. Adjusted Bank Balance
10. Compare Adjusted Balances
page 125
1
2
5
6
7
4
8
9
10
RECORDING A BANK SERVICE CHARGE ON A CHECK STUB
page 126
1. Write Service Charge
$8.00 on the check stub
under the heading
“Other.”
1
2
3
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
August 31. Received bank statement showing August
bank service charge, $8.00. Memorandum No. 3.
page 127
4
1
2
1. Date. Write the date.
3
2. Debit. Write the title of the
account to be debited. Record
the amount debited.
4. Source document. Write
3. Credit. Record the amount
the source document
credited.
number.
page 128
TERM REVIEW
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bank statement
Practice
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Working Together
On Your Own
Application Problems 1-2
Review
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Code of conduct
Checking account
Endorsement
Blank Endorsement
Special Endorsement
Restrictive
Endorsement
Postdated check
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Preparing a check stub
Preparing a check
Purpose of bank
reconciliation
Reflection on Jig saw
Section 5:3 – Dishonored Checks &
Electronic Banking
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Check the bank refuses to pay
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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
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Make the book up to date
See page 130
Working Together
Electronic Funds Transfer – transfers funds
without the use of checks
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Password / cash control
Debit Card
Petty Cash
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Amount of cash left on hand
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Used for making small payments
Assets
Normal balance = debit
Petty cash slip – from showing the purpose
and amount of payment – PROOF
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Slip number, date, to whom, reason, amount,
account and signature
Replenishing Petty Cash
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Working Together
Applications 3-5
Homework Challenge Problem