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Cash Control Systems. Accounting Chapter 5. Money = cash in accounting Businesses have large volumes of cash transactions both paid out and received Large payments made/received by checks Small payments made/received by cash Recording errors occur with large volumes of transactions

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cash control systems

Cash Control Systems

Accounting Chapter 5

cash transactions

Money = cash in accounting

  • Businesses have large volumes of cash transactions
    • both paid out and received
    • Large payments made/received by checks
    • Small payments made/received by cash
    • Recording errors occur with large volumes of transactions
  • Control systems needed to manage/track money, reduce errors
    • Accounting records – ledgers and journals
    • Checking Account
    • Monthly bank statements
CASH TRANSACTIONS
lesson 5 1

LESSON 5-1

Checking Accounts

checking account control system

Checking account: a bank account from which payments can be ordered by a depositor

Check: a business form ordering a bank to pay cash from a bank account

Deposit slip: prepared each time cash or checks are placed in a bank account

CHECKING ACCOUNT CONTROL SYSTEM
  • All deposits are entered on the next unused check stub
receiving process

RECEIVING PROCESS

You receive an investment from owner for $5000

Step 1: You issue a receipt to the owner

You keep the stub (tear along perforation)

Receipt given to Kim

receipt

slide6

THE PROCESS

  • Step 2: Enter deposit on the next unused check stub
  • Step 3: Calculate a new Subtotal
slide7

THE PROCESS

  • Step 4: Journalize the transaction in the journal
  • Step 5: Post it to the ledger of accounts
slide8

THE PROCESS

  • Step 6: Take money (checks & cash) to the bank
  • At the Bank:
    • Complete a Deposit slip: prepared each time cash or checks are placed in a bank account
    • Endorse (sign) the back of the checks being cashed
    • Bank issues a receipt for deposit
      • Receipt not entered in journal (done step 5)
slide9

Deposit Slips, Completing Check Stubs, Endorsements and Completing a Check, Recording a Voided Check

STEP 7

parts of a check
PARTS OF A CHECK

CheckNumber

Maker’s Name and Address

Date

ABA Number

Payee

Numeric Amount

WrittenAmount

Memo

Signature

Routing Numbers

Account Number

make deposits
MAKE DEPOSITS
  • Deposit slip used to deposit or withdraw cash from account - Found in back of checkbook
  • Enter total cash, individual checks and sum for subtotal
  • Checks being cashed must be “endorsed”

Dollars Cents

TechKnow Consulting

Phone: 701-746-5555

4567 West 17th Ave

Grand Forks, ND 58201

Date: 20

Sign here for less cash in Teller’s presence

make deposits1
MAKE DEPOSITS
  • Went to the bank on October 1, 2010. Deposited
    • $400.00 check from ABA 24-174
    • $850.00 check from ABA 12-510
    • $1772.50 in cash (TOTAL = 3022.50)

Dollars Cents

TechKnow Consulting

Phone: 701-746-5555

4567 West 17th Ave

Grand Forks, ND 58201

Date: 20

Sign here for less cash in Teller’s presence

123003175 43’’452119’’

record deposit on check stub
RECORD DEPOSIT ON CHECK STUB
  • Record Oct 1 deposit of $3022.50

NO. 2 $

Date 20

To

For

BAL BRO’T FOR’D …………

AMT DEPOSITIED ..

SUBTOTAL …………………

OTHER

SUBTOTAL………………….

AMT. THIS CHECK…………..

BAL. CAR’D FOR’D…………

NO. 2 24-317

1230

TechKnow Consulting

Phone: 701-746-5555

4567 West 17th Ave

Grand Forks, ND 58201

Pay to The

Order of

4600 00

$

Dollars

Memo

123003175 43’’452119’’

endorsement

Endorsement: A signature or stamp on the back of a check transferring ownership – cashing a check

  • Three types of endorsements:
    • Blank endorsement - only of the endorser’s signature
    • Special endorsement - indicating a new owner of the check
      • Transfer check from you to someone else to cash
    • Restrictive endorsement - restricting further transfer of a check’s ownership
      • Limits use of check
      • Ex: for deposit only
ENDORSEMENT:
endorsement1

Blank endorsement:

    • If lost with a blank endorsement, anyone can cash it
    • Only done while standing at the bank ready to deposit
    • Contains just a signature
  • Special Endorsement
    • Transfer to new owner - known as endorsement in full
    • Ex: Pay to the order of John Smith, Kim Parker. (check written on front to Kim, Kim signs it over to John)
    • Only the person named in the special endorsement can cash it (only John Smith)
  • Restrictive endorsement
    • Can only be used for what is stated on the back of the check
    • EX: For deposit only to the account of TechKnow Consulting
ENDORSEMENT:
endorsements
ENDORSEMENTS

Blank Endorsement

Kim signs this check over to Eleanor Johnson

Special Endorsement

Kim wants this for deposit only into TechKnowConsultings Account.

Restrictive Endorsement

record deposit on check stub1
RECORD DEPOSIT ON CHECK STUB
  • Aug. 3, wrote Check NO 1 to Port City Supply Company for $275.00 for supplies
    • Complete check stub first for your records

NO. 1 $

Date 20

To

For

BAL BRO’T FOR’D …………

AMT DEPOSITIED ..

SUBTOTAL …………………

OTHER

SUBTOTAL………………….

AMT. THIS CHECK…………..

BAL. CAR’D FOR’D…………

NO. 1 24-317

1230

TechKnow Consulting

Phone: 701-746-5555

4567 West 17th Ave

Grand Forks, ND 58201

Pay to The

Order of

$

Dollars

  • 00 00
  • 00
  • 5000 00

Memo

123003175 43’’452119’’

record deposit on check stub2
RECORD DEPOSIT ON CHECK STUB
  • Aug. 3, wrote Check NO 1 to Port City Supply Company for $275.00 for supplies.
    • Complete check stub for your records
    • Complete Check

NO. 1 $

Date 20

To

For

BAL BRO’T FOR’D …………

AMT DEPOSITIED ..

SUBTOTAL …………………

OTHER

SUBTOTAL………………….

AMT. THIS CHECK…………..

BAL. CAR’D FOR’D…………

NO. 1 24-317

1230

TechKnow Consulting

Phone: 701-746-5555

4567 West 17th Ave

Grand Forks, ND 58201

Pay to The

Order of

275.00

August 3 10

Port City Supply Company

Supplies

$

Dollars

  • 00 00
  • 00
  • 5000 00

Memo

8 1 10

123003175 43’’452119’’

  • 00
  • 275 00
  • 4725 00
voided checks
VOIDED CHECKS
  • Checks written in error/mistake must be tracked
  • Checks are voided and journalized
    • Void is written across both the check and the check stub
    • Check number entered as a transaction in the Journal

NO. 1 $

Date 20

To

For

BAL BRO’T FOR’D …………

AMT DEPOSITIED ..

SUBTOTAL …………………

OTHER

SUBTOTAL………………….

AMT. THIS CHECK…………..

BAL. CAR’D FOR’D…………

NO. 1 24-317

1230

TechKnow Consulting

Phone: 701-746-5555

4567 West 17th Ave

Grand Forks, ND 58201

Pay to The

Order of

$

Dollars

275.00

August 3 10

Port City Supply Company

Supplies

Void

Memo

Void

123003175 43’’452119’’

  • 00 00
  • 00
  • 5000 00

8 1 10

  • 00
  • 275 00
  • 4725 00
recording a voided check
RECORDING A VOIDED CHECK

1. Record the date.

2. Enter the word VOID in the Account Title column

3. Enter the check number for Doc NO.

4. Place a check mark in the Post. Ref. column

5. Place a dash in the Cash Credit column

checking account facts
Checking Account Facts
  • Postdated check: a check with a future date on it. Most banks will not accept postdated checks
  • Most checks are only good for 6 months
  • Checking Account Control Systems
    • Assist with ethical behaviors of employees
    • Code of Conduct: a statement that guides the ethical behavior of a company and its employees
terms review
TERMS REVIEW
  • code of conduct
  • checking account
  • endorsement
  • blank endorsement
  • special endorsement
  • restrictive endorsement
  • postdated check