Review Chapter 7
A business starts with how much $ in a change fund?
$200, can be more or less
Transactions can be completed by ______ rather than by the manual process of writing checks or using cash
(EFT) Electronic Funds Transfer
Checks deposited by not yet paid because the drawer didn't have enough money in the account are called ______ checks
(NSF) Non-Sufficient Funds
The bank normally sends...
1. A listing of cancelled checks. The bank may send "imaged" sheets showing faces of checks, though it is uncommon today. 2. Any other forms representing items added to or subtracted from the account.
A bank statement shows:
1. The balance at the beginning of a period 2. Deposits and other amounts during period 3. Checks and other amounts subtracted during period 4. Balance at end of period
How to deposit checks (4 ways):
1. The depositor delivers/mails the deposit ticket and all items being deposited 2. The bank gives/mails the deposit receipt to depositor 3. The deposit can be made after business hours by using the night depositor used by MOST banks 4. The deposit is put in a locked bag, which is placed in a secure drawer or chute at the bank, and is processed the following a.m.
Each check deposited is identified by its ___ number.
American Banker's Association (ABA)
ATM stands for?
Automated Teller Machines
The two basic types of endorsements are:
Blank and Restrictive
Every bank is required to maintain a _ _ _ to provide clear identification of every account holder
CIP (Customer Identification Program)
When establishing the petty cash fund, credit
Cash
Most ATM's are now on a system called?
Cirrus
A _____________ lists items being deposited to a checking account
Deposit Ticket
Deposits made but not yet recorded by the bank are called
Deposits in Transit
The ______ is the bank on which a check is drawn
Drawee
The ______ is the depositor who orders the bank to pay the cash
Drawer
In the Petty Cash description line, you write (indented)
Establish petty cash fund
An EIN can be obtained from the ______
IRS (Internal Revenue Service)
The _______ code is used to sort and route checks throughout the US banking system
MICR
Part of an American Banker's Association (ABA) number appears in the ____, on the upper-right hand side of a check
MICR (Magnetic Ink Character Recognition)
Each check must be endorsed by the __________, the party to whom the check is payable.
Payee
The ______ is the person being paid the cash
Payee (Pay me)
When establishing the petty cash fund, debit
Petty Cash
A fund called the _________ is established to pay for small items with CASH.
Petty Cash Fund
Depositors using ATM's must first key in their ___
Pin
Businesses commonly use what kind of stamp to endorse checks for deposit?
Rubber (w/ink pad)
Opening and closing and checking account key forms are
Signature card, deposit tickets, checks, bank statements
A ___ is shown on the card to ID the depositor for income tax purposes.
TIN (Taxpayer Identification Number)
All cash receipts should be deposited daily in the bank
True
All disbursements, except for payments from petty cash, should be made by check
True
Alternatively, the individual checks can be ID'd by the name of the writer on the check
True
Each depositor has a plastic card & a 4-digit pin
True
Establish the Petty Cash Fund FIRST. T or F
True
Establish the change fund FIRST. T or F
True
Make sure ALL fields are correct before signing a check: T or F
True
Normally, only the numerator of an American Banker's Association number is used ID-ing checks. True or False?
True
On a deposit ticket; currency, coins, and checks are listed separately.
True
Petty cash is for small expenses.
True
The process of bringing the bank and book balances into agreement is called preparing a
bank reconciliation
A statement is issued to the depositor once a month called a
bank statement
A statement of account issued by a bank once a month is a
bank statement
The payee simply signs the back of the check. This makes the check payable to any bearer.
blank endorsement
Checks used by a business are usually bound in a ____
book
Checks PAID by the bank and returned to the depositor are called
cancelled checks
ATMS are also known as ______ machines, and they make NO deposits.
cash
In a business, ____ includes checks received from customers, money orders, and bank cashier checks
cash
A _____ is a document ordering a bank to pay cash from the depositor's account
check
In some checkbooks, checks are attached individually by a
check stub
Space is contained to record all relevant information about a check on its ___________ __________
check stub
Do you debit or credit Cash when establishing the Petty Cash Fund?
credit
Do you debit or credit Petty Cash when establishing the Petty Cash Fund?
debit
A form showing a detailed list of items being deposited is a _____________ __________
deposit ticket
A _____________ consists of stamping or writing the depositor's name and other information on the back of a check.
endorsement
The _____________ consists of stamping or writing the payee's name and sometimes other information (on the back of the check) in the space provided near the left end.
endorsement 2
Do a check stub _______ to retain a record of each check-issued-needed for a proper journal entry
first
Because cash plays such a central role in operating a business, cash must be carefully _______________ and __________
monitored and controlled
Cirrus allows
non-customers to use ATM's in the U.S. and foreign countries
Checks issued during the period but not yet processed by the bank are called _______________ _______
outstanding checks
When actual cash on hand exceeds what is on the register tape plus the change fund, this difference is an
overage (revenue)
PIN stands for a
personal identification number
A __________ is a special (formal) multi-column record where petty cash payments are recorded. (it supplements a regular accounting record)
petty cash payments record
A receipt called a __________ _______ ___________ is prepared for every payment from the petty cash fund.
petty cash voucher
Other checkbooks are attached to a small ________________ book
register
The cash short and over account is used when actual cash on hand is different from what is on the ___________ tape plus the change fund
register
At the end of the month, the petty cash fund is ___________, or brought up to its original amount.
replenished
An endorsement where the payee adds words such as: "pay to the order of" (specific bank), "pay to daryl beck" - to restrict payment. or "For deposit only" will also restrict the payment of the check for a specific purpose.
restrictive endorsement
The bottom half of an ABA (American Banker's Association) number helps.........
routing the check to the specific area in which the check is drawn
Bank charges for services are called
service charges
When actual cash is less that what is on the register tape plus the change fund, this difference is a
shortage (expense)
To open a checking account, each person authorized to sign checks must fill out a _________________ _______. The bank can use this to verify the depositor's signature on banking transactions.
signature card
The third and most critical part to signing a check is _____________________. It should be done LAST
signing it
An American Banker Association number on a check is the _______ number on the _________ ___________ _______ side. It is written as a ________
small, upper-right, fraction
A business should have a ___________ __ _____________ ____________, a set of policies and procedures designed to ensure proper accounting for transactions
system of internal control
Signing a check authorizes:
the bank to pay cash from the drawer's account
TIN (Taxpayer Identification Number)
the depositor's social security number or employee identification number (EIN)
The numerator of the American Banker's Association (ABA) identifies
the location and district of the bank
If financial computer software is used, the check & register can be prepared electronically. True or False
true
