chapter 9: cash
restrictive endorsement
a signature that transfers a check to specific party for a specific purpose
full endorsement
a signature transferring a check to a specific person, firm or bank
bank reconciliation statement
a statement that accounts for all differences between the balance on the bank statement and the book balance of cash is called a
internal controls related to petty cash include
keeping petty cash in a safe, locked cash box preparing a petty cash voucher for each payment
drawer
the person or firm issuing the check
payee
the person or firm to whom a check is payable
identify the characteristics of debit cards
- look like credit cards or ATM cards but operate like cash or a personal check - debit means subtract so when you use your debit card, you are subtracting your money from your bank account -funds on deposit with a bank represent a liability to the bank - by debiting accounts when depositors use their debit cards, the bank reduces the depositors' account balances, which reduces the bank's liabilities to depositors - debit cards are accepted almost everywhere including grocery stores, retail stores, gasoline stations, and restaurants - debit cards are popular because they offer an alternative to carrying checks or cash - transactions that are completed with the debit card will appear on your bank statement
cash short or over account
An account used to record any discrepancies (short or over amounts) between the amount of currency and coins in the cash register and the amount shown on the audit tape. - if the account has a credit balance, there is an overage, which is treated as revenue - if the account has a debit balance, there is a shortage, which is treated as an expense
a deposit that is recorded in the general journal but that reaches the bank too late to be shown on the monthly bank statement is called a
deposit in transit
a company issued a check to replenish its petty cash fund. an analysis of payments from the fund showed only one payment of 50 dollars for delivery expense. the replenishment would be recorded with a
credit to cash, debit to delivery expense
a company established a 100 dollar petty cash fund the journal entry to record this transaction includes a:
credit to cash, debit to petty cash
which of the following are internal controls related to cash receipts
keep cash receipts in a locked register, safe, or drawer cash receipts should always be recorded promptly bank reconcilliation should be completed by an employee not responsible for cash receipts
the following accounts are used as typical column headings on a petty cash analysis
miscellaneous expense debit delivery expense debit supplies debit
checks that have been recorded in the general journal but have not yet been paid by the bank are called
outstanding checks
a special-purpose cash fund used to handle payments involving small amounts of money is called a
petty cash fund
blank endorsement
signature transferring ownership without specifying who or why
drawee
the bank on which a check is drawn
a petty cash voucher is used to record
the payments made from the petty cash fund - the petty cash voucher shows the voucher number, amount, purpose of the expenditure, and account to debit
negotiable
A financial instrument whose ownership can be transferred to another person or business.
credit memorandum
A form that explains any addition, other than a deposit, to a checking account.
postdated check
a check dated some time in the future
dishonored check
A check returned to the depositor unpaid because of insufficient funds in the drawer's account; also called an NSF check.
debit memorandum
A form that explains any deduction, other than a check, from a checking account.
canceled check
a check that has been paid by the bank on which it was drawn is called a check
service change
a fee charged by a bank to cover the costs of maintaining accounts and providing services
statement of account
a form sent to a firm's customers showing transactions during the month and the balance owed
deposit slip
a form used to record the deposit of cash or checks to a bank accounts is called a
blank
a signature of the payee written on the back of the check that transfer ownership of the check without specifying to whom or for what purpose is called a ___________ endorsement
endorsement
a written authorization that transfers ownership of a check
check
a written order instructing a bank to pay a specific sum of money to a deisgnated party
promissory note
a written promise to pay a specified amount of money on demand or at a definite time - most notes require that interest is paid at a specified rate - businesses use promissory notes to extend credit for some sales transactions
outstanding checks and deposits in transit are
common reasons why the bank statement balance does not agree with the book balance
identify internal controls related to cash payments
enter all cash payment transactions into the accounting records promptly issue checks only for approved bills and invoices
cash short or over (important reminder)
expect errors when employees make change, but investigate large and frequent errors. they may indicate dishonesty or incompetence, neither of which are good attributes in employees
when completing a bank reconcilliation, adjustments such as deposits in transit, outstanding checks, and bank errors, are adjustments that are listed in the
first section, or adjustment to the bank statement balance
cash
in accounting, currency, coins, checks, money orders, and funds on deposit in a bank (most cash transactions involve checks)
common reasons that the bank statement balance does not agree with the book balance includes which of the following
unrecorded deposits, deposit in transit, service charges, outstanding checks
cash proof
verifies that he amount in the cash register, less the change fund, equals the amount shown on the cash register transaction totals