Principles of Accounting Ch. 9

bonding

The process by which employees are investigated by an insurance company that will insure the business against losses through employee theft or mishandling of funds.

payee

The person or firm to whom a check is payable.

service charge

A fee charged by a bank to cover the costs of maintaining accounts and providing services.

negotiable

A financial instrument whose ownership can be transferred to another person or business.

deposit slip

A form prepared to record the deposit of cash or checks to a bank account.

statement of account

A form sent to a firm's customers showing transactions during the month and the balance owed.

credit memorandum

A form that explains any addition, other than a deposit, to a checking account.

debit memorandum

A form that explains any deduction, other than a check, from a checking account.

petty cash voucher

A form used to record the payments made from a petty cash fund.

petty cash analysis sheet

A form used to record transactions involving petty cash.

blank endorsement

A signature of the payee written on the back of the check that transfers ownership of the check without specifying to whom or for what purpose.

restrictive endorsement

A signature that transfers a check to a specific party for a stated purpose.

full endorsement

A signature transferring a check to a specific person, firm, or bank.

cash receipts journal

A special journal used to record and post transactions involving the receipt of cash.

cash payments journal

A special journal used to record transactions involving the payment of cash.

petty cash fund

A special-purpose fund used to handle payments involving small amounts of money.

bank reconciliation statement

A statement that accounts for all differences between the balance on the bank statement and the book balance of cash.

cash register proof

A verification that the amount of currency and coins in a cash register agrees with the amount shown on the cash register audit tape.

endorsement

A written authorization that transfers ownership of a check.

check

A written order signed by an authorized person instructing a bank to pay a specific sum of money to a designated person or business.

promissory note

A written promise to pay a specified amount of money on a specific date.

Cash Short or Over account

An account used to record any discrepancies between the amount of currency and coins in the cash register and the amount shown on the audit tape.

postdated check

A check dated some time in the future.

canceled check

A check paid by the bank on which it was drawn.

dishonored (NSF) check

A check returned to the depositor unpaid because of insufficient funds in the drawer's account; also called an NSF check.

deposit in transit

A deposit that is recorded in the cash receipts journal but that reaches the bank too late to be shown on the monthly bank statement.

electronic funds transfer(EFT)

An electronic transfer of money from one account to another.

outstanding checks

Checks that have been recorded in the cash payments journal but have not yet been paid by the bank.

cash

In accounting, currency, coins, checks, money orders, and funds on deposit in a bank.

drawee

The bank on which a check is written.

drawer

The person or firm issuing a check.