CASH CONTROLS AND
BANKING ACTIVITIES
Chapter 11
Protecting Cash
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Internal Controls – Procedures within the business
that are designed to protect cash and other assets
and to keep reliable records
 Examples
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(pg 278)
External Controls – Procedures outside the business
to protect cash and other assets
 Examples
The Checking Account
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Checking Account –
Check – Written order from a depositor telling the
bank to pay the stated amount
Depositor – Person or business that has cash on deposit
in a bank
ABA Number – Fractional # listed below check #
Signature Card – Contains authorized signature to write
checks on an account
Deposit Slip – Bank form listing the cash and checks to
be deposited
The Checking Account

Endorsement – Authorized signature written or
stamped on back of check
 Blank
(Just a signature)
 Special (Pay to the order of…)
 Restrictive (For Deposit Only, Signature)
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Payee –
Drawer – Person who signs check
Drawee – Bank on which the check is written
Voiding a Check -
Reconciling the Bank Statement

Proving Cash
 If
all transactions have been journalized and posted
 Cash

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Bank Statement – Itemized record of all
transactions over a given period (month)
Canceled Checks – Checks that have cleared
 Some

in Bank Balance = Checkbook Balance
banks mail them back to you
Imaged Checks – Copies of the original
Reconciling the Bank Statement

Reconciling the Bank Statement – Process of
determining differences between bank statement
and checkbook
 Usually
Bank Balance ≠ Checkbook Balance
 Why?
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Outstanding Transactions
Mistakes
Reconciling the Bank Statement
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Outstanding Checks – Written but not cashed yet
Outstanding Deposits – Recorded in checkbook but
not on bank statement
Bank Service Charge – Fee charged by the bank
 Miscellaneous
Expense
Reconciling the Bank Statement


Steps on pg 287
Complete the Bank Reconciliation Form
Journalizing Service Charges
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Debit Miscellaneous Expense
Credit Cash
More Checking Vocabulary
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Stop Payment Order
NSF check
Check 21
Postdated check
Even More Checking Vocabulary
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Electronic Funds Transfer System (EFTS)
Bankcard
Automated teller machine (ATM)