Accounting Ch 5

account title _____ _____ when cash is short _____ when cash is over

Cash Short and Over debited credited

replenish petty cash at least once per month

GAAP Matching revenue with expenses

Since there is no monetary transaction involved there is no account called "voided check" BUT, we record this in the journal to maintain records for cash control

GAAP unit of measurement

When a receipt is ____ available, a petty cash slip must be prepared

NOT

When a ______ is available, it should be used as a source document

receipt

After receiving the bank statement, it must be ___________ to the checkbook

reconciled

Any new transactions or errors shown on the bank statement MUST be _____ in the checkbook the correct check book balance ______ on the next stub the transaction must be ______ the transaction must also be _____ in order to update the G/L account balance

recorded updated journalized posted

Other fees/service charges monthly bank service charge, dishonored check fees, etc any new transactions or errors shown on the bank statement MUST be _____ in the checkbook, the checkbook balance _____ AND the transaction ______ and _______

recorded updated journalized posted

Dishonored/Returned Checks: a check that a bank _____ to pay sometimes these are checks _____ by the client and deposited into the bank; the deposit must be reversed the G/L accounts AND checkbook must be ______ Other times these are checks _____ by the client but not paid out of the account; the G/L accounts AND checkbook must be _____ the check must be ______ _____ fees are usually charged and also must be recorded and journalized

refuses received corrected written corrected voided additional

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

check

Usually, a petty cash account is established (set up) by writing and cashing a _____ from the business's normal checking account

check

Issues related to cash control/Benefits of using Checking account: Chance of recording _____ Ease of transfer without any question about ______ ______ as cash is moved from one place to another

errors ownership loss

A depositor may have made a math or recording _______

error

Blank endorsement definition

gives the bank permission to pay the check anyone finding the check can cash it, this should only be used once at the bank

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

restrictive endorsement

A ______ may not have been recorded in the depositor's business records (checkbook balance)

service charge

List five reasons why a depositor's records (checkbook balance) and a bank's records (bank statement) may differ.

service charge outstanding deposits outstanding checks error EFTs

Petty cash fund more likely to be ____ than _____

short over

Opening a checking account: tells the bank who is authorized to sign checks for the account

signature card

A check is NOT valid until it is

signed

Why do businesses use petty cash funds?

small cash payments. doesnt make sense to use a check for something so little

Cancelled Checks: Checks that _____ been paid by the bank For each canceled check listed on the bank statement, a _____ is placed on the corresponding check stub

have check mark

Outstanding Deposits: deposits made to the bank account but ______ yet shown on a bank statement many times this happens because the bank statement date is _____ the deposit was made

have not before

Outstanding Checks: checks written from the account but _____ yet been paid from the bank account (not reported on a bank statement) _____ mark is placed on outstanding checks until they clear the bank

have not no

Reconciling _________ is an important aspect of cash control

immediately

ETs (electronic funds transfer) transfer of money _____ or ______ of an account without a paper document such as check or deposit slip

into out

It should include, or be noted, where purchased, date, _____, _____ and authorized person

items amount

______ may be recorded in the depositor's records but not on a bank statement

outstanding checks

________ may be recorded in the depositor's records but not on a bank statement

outstanding deposits

Small cash payments

petty cash

an amount of cash kept on hand and used for making small payments

petty cash

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

petty cash slip (like a memo)

special endorsement definition

sometimes known as an endorsement in full this signs ownership of the check to someone else. only they can sign and endorse it "3rd party check"

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

special endorsement

What is on the bottom of the check stub

the amount of the check the new balance

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 and doesnt affect petty cash

Safety measures: _____ ______

theft damage (fire, flood)

Restrictive endorsement definition

this restricts what can be done with the check safest option when depositing checks very common business practice

If a mistake is made on a check, it must be _____ Write the word _____ across the front of the AND on the check stub

voided VOID

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

An outstanding check; outstanding deposit

_______ were not recorded in the checkbook

EFTs

How do you complete record keeping for "other" transactions?

Enter all necessary adjustments to the checkbook on the next available check stub and update the balance Journalize all adjustments

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

cash short (expense)

Compared that the information on a bank statement and a checkbook are in ________

agreement

What is on the top of a check stub

amount of check date whom the check is to be paid reason/purpose of the check

petty cash is an account, other than the checking account, in which a business keeps cash, so it is an _____

asset account

It should include, or be noted, where purchased, date, items, amount and _______

authorized person

What are some transactions, "other" than checks or deposits made at the bank, that effect the checkbook, and Cash account, balance?

bank service charges (monthly fee, dishonored checks fee, stop payment fee) dishonored (returned, bounced) check EFTs (ATM transaction, ATM fees, electronic payments made, electronic payments received, electronic deposits)

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

bank statement

What are the 4 main steps when reconciling a bank statement? compare the ______ to the ____ and verify the transactions prepare a bank reconciliation to prove the _____ are the same enter all necessary adjustments to the _____ on the next available check stub and update the _____ ______ all adjustments made in the checkbook

bank statement checkbook adjusted balances checkbook balance journalize

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

blank

When reconciling the check book, the bank statement is used to determine:

cancelled checks outstanding checks outstanding deposits

businesses use petty cash funds for making small ___ payments for which writing a ____ is not time or cost effective

cash check

_____ rather than _____ is credited when a petty cash fund is replenished because the check issued to replenish petty cash ____ the amount of cash in the checking account and ____ affect the balance of the petty cash account

cash petty cash reduces does not

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

cash over

Dishonored Checks Also called returned; bounced. A check that a bank refuses to pay is called a dishonored check. there are many reasons a bank may dishonor a check:

check appears to be altered signature on check doesn't match the signature on the signature card the amounts written in words and in numbers do not agree the check is postdated a stop payment has been placed on the check the account of the person who wrote the check has insufficient funds to pay the check (also called a non-sufficient check or NSF check)

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

checking account

Account balance: either a debit or credit usually _____

debit

what accounts are affected when electronic funds transfer is used to pay cash on account?

debit account payable credit cash

What account(s) are affected when a debit card is used to purchase supplies?

debit supplies credit cash

When reconciling the check book, bank statement is used to determine

dishonored/returned checks EFTs Other fees

Checks must be _____ in order to be deposited/cashed. A signature or stamp on the back of a check transferring ownership called an ______

endorsed endorsement