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