Accounting 5.1-5.4

1. List the three types of endorsements.

Blank endorsement Special endorsement Restrictive endorsement

2. What account is credited when electronic funds transfer is used to pay cash on account?

Cash

3. What account is credited when a debit card is used to purchase supplies?

Cash

1. Why do businesses use petty cash funds?

For making small cash payments for which writing a check is not time- or cost-effective

A non-sufficient funds check is also known as an

NSF check

The custodian prepares a petty cash report when the petty cash fund is to be ___________

replenished

A business form ordering a bank to pay cash from a bank account is known as a

check

A special endorsement is sometimes known as an

endorsement in full

An endorsement restricting further transfer of a check's ownership is called a

restrictive endorsement For deposit only to the account of Student's Signature

A check dishonored by the bank because of insufficient funds in the account of the maker of the check is called a

non-sufficient funds check (NSF check)

An amount of cash kept on hand and used for making small payments is called

petty cash

A form showing proof of a petty cash payment is called a

petty cash slip

7. A check with a future date on it. (p. 126)

postdated check

An endorsement indicating a new owner of a check is called a

special endorsement Pay to the order of Helen Goldsmith Student's Signature

8. A check that cannot be processed because the maker has made it invalid. (p. 127)

voided check

•Account title—Cash Short and Over

•Debited when cash is short •Credited when cash is over

•Account balance

•Either a debit or credit •Usually a debit •Petty cash fund more likelyto be short than over

Three types of commonly used endorsements

●Blank endorsement ●Special endorsement ●Restrictive endorsement

Opening a checking account

●Signature card ●Deposit slip

Petty Cash Report

1) Date and Custodian Name 2) Fund total 3) Payments by General Ledger Account 4) Total Payments 5) Recorded Amount on Hand 6) Actual Cash on Hand 7) Subtract the actual cash on hand from the recorded amount on hand. 8) Amount to Replenish

2. If a check mark is placed on the check stub of each canceled check, what does a check stub with no check mark indicate?

An outstanding check

1. List four reasons why a depositor's records and a bank's records may differ.

1. A service charge may not have been recorded in the depositor's business records. 2. Outstanding deposits may be recorded in the depositor's records but not on a bank statement. 3. Outstanding checks may be recorded in the depositor's records but not on a bank statement. 4.A depositor may have made a math or recording error.

Bank Statement Reconciliation

1. Date 2. Check Stub Balance 3. Service Charge 4. Adjusted Check Stub Balance 5. Bank Statement Balance 6. Outstanding Deposits 7. Subtotal 8. Outstanding Checks 9. Adjusted Bank Balance 10. Compare Adjusted Balances

Recording a Voided Check

1. Record the date in the Date column. 2. Write the word VOID in the Account Title column. 3. Write the check number in the Doc. No. column. 4. Place a check mark in the Post. Ref. column. 5. Place a dash in both the Debit and Credit columns.

1. List six reasons why a bank may dishonor a check.

1. The check appears to be altered. 2. The signature on the check does not match the signature on the signature card. 3. The amounts written in figures and in words do not agree. 4. The check is postdated. 5. The person who wrote the check has stopped payment on it. 6.The account of the person who wrote the check has insufficient funds to pay the check.

Recording a Dishonored Check on a Check Stub

1. Write Dishonored Check under the heading Other. 2. Write the total of the dishonored check in the amount column. This is the amount of the dishonored check plus the service fee. 3. Calculate and record the new subtotal.

Recording a Bank Service Charge on a Check Stub

1. Write Service Charge on the check stub under the heading Other. 2. Write the amount of the service charge in the amount column. 3. Calculate and record the new subtotal on the Subtotal line.

Deposit Recorded on a Check Stub

1. Write balance brought forward on the check stub. 2. Write the date of the deposit on the stub. 3. Write the amount of the deposit on the stub. 4. Calculate the subtotal.

2. List the steps for preparing a check stub.

1. Write the amount of the check after the dollar sign at the top of the stub. 2. Write the date of the check on the Date line. 3. Write to whom the check is to be paid on the To line. 4. Record the purpose of the check on the For line. 5. Write the amount of the check after the words Amt. This Check. 6. Calculate the new checking account balance and record it in the amount column on the last line of the stub.

Completed Check Stub and Check

1. Write the amount of the check on the stub. 2. Write the date of the check on the stub. 3. Write to whom the check is to be paid on the stub. 4. Record the purpose of the check on the stub. 5. Write the amount of the check on the stub. 6. Calculate the new checking account balance and record the new balance. 7. Write the date the check is issued. 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.

Establishing a Petty Cash Fund

1. Write the date in the Date column. 2. Write the title of the account to be debited in the Account Title column. Record the amount debited in the Debit column. 3. On the next line, indented, write the title of the amount credited in the Account Title column. Write the credit amount in the Credit column. 4. Write the source document number in the Doc. No. column.

Journalizing a Bank Service Charge

1. Write the date in the Date column. 2. Write the title of the account to be debited in the Account Title column. Record the amount debited in the Debit column. 3. On the next line, indented, write the title of the amount credited in the Account Title column. Write the credit amount in the Credit column. 4. Write the source document number in the Doc. No. column.

Journalizing a Debit Card Transaction

1. Write the date in the Date column. 2. Write the title of the account to be debited in the Account Title column. Record the amount debited in the Debit column. 3. On the next line, indented, write the title of the amount credited in the Account Title column. Write the credit amount in the Credit column. 4. Write the source document number in the Doc. No. column.

Journalizing a Dishonored Check

1. Write the date in the Date column. 2. Write the title of the account to be debited in the Account Title column. Record the amount debited in the Debit column. 3. On the next line, indented, write the title of the amount credited in the Account Title column. Write the credit amount in the Credit column. 4. Write the source document number in the Doc. No. column.

Journalizing an Electronic Funds Transfer

1. Write the date in the Date column. 2. Write the title of the account to be debited in the Account Title column. Record the amount debited in the Debit column. 3. On the next line, indented, write the title of the amount credited in the Account Title column. Write the credit amount in the Credit column. 4. Write the source document number in the Doc. No. column.

3. List the steps for preparing a check.

1. Write the date. 2. Write to whom the check is to be paid following the words Pay to the order of. 3. Write the amount in figures following the dollar sign. 4. Write the amount in words and draw a line through the unused space up to the word Dollars. 5. Write the purpose of the check on the line labeled For. 6. Sign the check.

A petty cash on hand amount that is less than the recorded amount is called

cash short

2. Why is Cash rather than Petty Cash credited when a petty cash fund is replenished?

The check issued to replenish petty cash is a credit to Cash and does not affect Petty Cash.

An accounting worker who processes routine details about accounting transactions.

accounting clerk

A report of deposits, withdrawals, and bank balances sent to a depositor by a bank is called a

bank statement

An endorsement consisting only of the endorser's signature is called a

blank endorsement Student's Signature

A check that has been paid by the bank is called a

canceled check

A petty cash on hand amount that is more than the recorded amount is called

cash over

A bank account from which payments can be ordered by a depositor is called a

checking account

A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder is called a

debit card

A bank form which lists the checks, currency, and coins an account holder is adding to the bank account is called a

deposit slip

A check that a bank refuses to pay is called a

dishonored check

•A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents is called

electronic funds transfer (EFT).

A signature or stamp on the back of a check transferring ownership is called an

endorsement

How Businesses Use Cash

●Small cash payments ●Issues related to cash -Chance of recording errors -Ease of transfer without any question about ownership -Loss as cash is moved from one place to another ●Safety measures