Accounting – Chapter 5
CASH CONTROL
SYSTEMS
ETHICAL DECISIONS: Business Codes of Conduct
 Read aloud “How Businesses Use Cash”
 Txtbk p. 118
 Read Making Ethical Decisions: Business Codes of
Conduct
 Merck Code of Conduct
 Activity: Read other company’s codes of conduct
and compare and contrast them
5-1 Checking Accounts
 Checking account: a bank account from which
payments can be ordered by a depositor
 Opening an account:
 Signature cards
DEPOSITS Txtbk p. 119
 Deposit slips
Vary by bank
 Checks are listed with their routing number
 24- 108
 Receive a receipt from bank w/ printed verification

 Deposits are recorded on a check stub
Date
 Amount
 New balance

 Deposits are compiled cash receipts

All journal entries for the receipts have been made previously
ENDORSEMENTS Txtbk p. 120
 Endorsement – a signature or stamp on the back of a
check transferring ownership
Signature should be exactly as appears in payee line
 Followed by official signature

 Blank Endorsement – Only the endorser’s signature

If lost or stolen, can be cashed by anyone in possession
 Special Endorsement – Indicates a new owner of a
check
“Pay to the order of” and name of new owner
 Can only be cashed by the person or business named

 Restrictive Endorsement – limits use of the check to
purpose stated
“For Deposit Only”
 Often a stamped endorsement

Which has most security and would most often be used in transacting busin
CHECKS
Txtbk pp. 121
 Preprinted
 Numbered
 What is the benefit of having numbered checks?

Help keep track of all checks to assure none are lost or
misplaced
 Prepare check stub first, write check 2nd
 Why?

Ensures that the check information is recorded
Preparing Check Stubs & Checks
Txtbk pp. 121
 The check stub:
 Amount
 Date
 Payee
 Purpose
 Amount of check written in words
 Calculate new balance
 The check:
 Date





Do not postdate
Payee
Amount
Amount in words
Purpose of check
VOIDED CHECKS Txtbk p. 122
 When to void a check
 An error in preparing the check
 How to void a check
 Write VOID in large letters across the check stub and the
check
 Recording a voided check
 In journal
Date
 VOID in Account title
 Check # in Doc. No.
 Checkmark in Post. Ref. column
 Dash in Cash Credit Column

Why can’t we just throw away a voided check?
PRACTICE!
 WP pp. 93, Txtbk p. 123
 HOMEWORK: OYO 5-1
 WP pp. 94, Txtbk p. 123
APP
Problem: 5-1