Internal Control of Cash Internal Control Proceduresseparation and rotation of dutiescash receipts deposited dailyall other payments made by checkauthorization required for activitieschecks and other documents prenumbered
Learning Objective 1 Depositing, writing, and endorsingchecks for a checking account.
Learning Unit 6-1 A signature card is required for validation to protect against forgery and unauthorized signing.Duplicate deposit tickets are used.ATM cards and personal identification numbers are protected.
Learning Unit 6-1 Check endorsementWhat is a check endorsement? It is the signing or stamping of one’s name on the back left-hand side on the check.Checks must be signed by the person to whom the check is made out.
Learning Unit 6-1
Learning Unit 6-1 The checkbookA check is a written order.The drawer is the one who writes the check.The drawee is the one who pays the money to the payee (bank).
Learning Unit 6-1 The checkbookThe payee is the one to whom the check is payable.Write checks properly to ensure that amounts and payee cannot be changed.
Learning Unit 6-1 This is a process that verifies the cash balance in the business records to the ending bank balance for the month.Deposits in transit are deposits not recorded by the bank before the report (add to the bank balance).
Learning Unit 6-1 The bank reconciliationOutstanding checks are issued checks that have not yet cleared the bank (subtract from the bank balance).Service charges are fees charged by a bank (subtract from the bank balance).
Learning Unit 6-1 The bank reconciliationNonsufficient funds (NSF) checks are those which are received, deposited in the bank, and returned because the drawer did not have funds in their account (subtract from bank balance).The check and a collection fee is charged back to the drawer.
Learning Unit 6-1 TerminologyBank credits are when a bank credits the account, which is an increase to the cash balance in the business. What are some examples?bank errors
Learning Unit 6-1 TerminologyBank debits are a deduction from the cash balance in the business. What are some examples?bank errorsNSFsservice charges
Learning Objective 2 Reconciling a bank statement.
On August 2, Clara J. Accounting Practice received the July’s bank statement.It indicated the following:The bank balance was $25,225.The bank had collected a note receivable from one of Clara’s customers in the amount of $1,000.
The Bank Reconciliation Process The bank paid the electric bill of $300.There was a $200 check returned for NSF.Interest earned on the account was $15.Bank service charges were $6.
The Bank Reconciliation Process Clara’s books indicates a cash balance of $26,647.A deposit of $3,250 was mailed to the bank on June 30.Checks issued in June for $1,319 have not yet been paid by the bank.
The Bank Reconciliation Process
The Bank Reconciliation Process
The Bank Reconciliation Process Balance per books Balance per bank $27,156 $27,156
Learning Objectives 3 and 4 Establishing and replenishingan auxiliary petty cash record.Establishing and replenishinga change fund.
Learning Unit 6-2 Petty cash fundThis is an account used for paying small day-to-day expenses.The only time petty cash is entered in the journal is to establish the fund (or to change the level of cash in the fund).Expenses are debited and Cash credited to replenish the fund.
Learning Unit 6-2 What is the entry to record the establishment of a $150 petty cash fund?Petty Cash 150 Cash in bank 150 To open the petty cash fund
Learning Unit 6-2 Forty dollars were taken out of the petty cash fund for coffee and other miscellaneous expenses. What is the journal entry to record the replenishment of the fund?Miscellaneous expense 40 Cash in bank 40 To replenish the petty cash fund
Learning Objective 5
Cash Short and Over How are small cash errors recorded?Beginning change fundCash register totalCorrect amount of cashCounted cash
End of Chapter 6
Dostları ilə paylaş: |
