Cash Control and Banking Activities

1. Chapter 11 $ Cash Control and Banking Activities $ Making Accounting Relevant Businesses deposit all cash and checks into a bank account and make payments using checks. This policy helps to protect cash from loss or theft. $ $ What other benefit does a business gain from the use of a checking account?

2. Chapter 11 $ Section 1 Banking Procedures • What You’ll Learn • What controls a business uses to protect cash and why these controls are needed. • To complete forms used to open a checking account. • To record information on check stubs. • To prepare a check correctly. $ $ $

3. Section 1 Banking Procedures (cont'd.) Chapter 11 $ Why It’s Important Cash is a valuable asset. It must be protected and processed properly. $ • Key Terms • internal controls • external controls • checking account • check • depositor • signature card • deposit slip • endorsement • restrictive endorsement • payee • drawer • drawee • voiding a check $ $

4. Section 1 Banking Procedures (cont'd.) Chapter 11 $ Protecting Cash It is important to protect cash from loss, waste, theft, forgery, and embezzlement. $ $ $

5. Section 1 Banking Procedures (cont'd.) Chapter 11 $ Protecting Cash (cont'd.) INTERNAL CONTROLS $ 1. Limit the number of persons handling cash. 2. Separate accounting tasks involving cash. 3. Bond (insure) employees who handle cash or cash records. 4. Use a cash register and a safe. 5. Deposit cash receipts in the bank daily. 6. Use checks to make all cash payments. $ $

6. Section 1 Banking Procedures (cont'd.) Chapter 11 $ Protecting Cash (cont'd.) $ EXTERNAL CONTROLS 1. Verify signatures on checks. 2. Maintain records of transactions. $ $

7. Section 1 Banking Procedures (cont'd.) Chapter 11 $ Opening a Checking Account • Allows a person or business to deposit cash in a bank and to write checks against the account balance. • A signature card contains the signature(s) of the person(s) authorized to write checks on the account. • Printed checks are packaged together in checkbooks. $ $ $

8. Section 1 Banking Procedures (cont'd.) Chapter 11 $ Making Deposits to a Checking Account Businesses make regular deposits to protect the currency, coins, and checks received. $ $ $

9. Section 1 Banking Procedures (cont'd.) Chapter 11 $ Endorsing Checks To deposit the check in a checking account, the depositor endorses the check to transfer ownership to the bank. An endorsement is an authorized signature written or stamped on the back of a check representing a promise to pay. $ $ $

10. Section 1 Banking Procedures (cont'd.) Chapter 11 $ Recording Deposits in the Checkbook $ $ Deposits New Balance $

11. Section 1 Banking Procedures (cont'd.) Chapter 11 $ Writing Checks Enter amount Enter payee Enter date $ Enter payee Enter date Enter purpose Enter amount $ $ Sign the check Enter new balance Enter amount Enter dollar amount in words

12. Section 1 Banking Procedures (cont'd.) Chapter 11 $ Voiding a Check $ Writing the word “Void” in large letters across the front of a check (in ink) is known as voiding a check. $ $

13. Section 1 Banking Procedures (cont'd.) Chapter 11 $ Check Your Understanding $ Cash is protected through internal controls and external controls. Describe controls over cash. $ $