 ease with which asset can be converted to cash  Most Liquid Asset:  Cash  most in need of protection

 protect from:  loss  theft  forgery  embezzlement  waste

1. limit cash handlers 2. separation of duties 3. bonding employees 4. use safes and cash registers 5. make daily deposits 6. use pre-numbered checks 7. reconcile bank statements

 banking and currency exchange procedures

 allows depositor to write checks against money on deposit  open account at bank or credit union 1. fill out signature card 2. deposit cash in bank

in check books with perforated check stub pre-numbered as internal control include ABA number – American Bankers Association – also called routing number helps route check city – bank 3222 federal reserve district

MICR – magnetic ink character recognition – include ABA #, account # and check # for electronic routing

 fill in check stub first  reduces chance of forgetting to complete check stub  source document  use ink to help prevent check altering

-enter numeric and written dollar amounts as far to left as possible to prevent altering -limit the spacing between words in the written dollar amount

if error made when writing check, that check is not used – do not try to correct (corrected checks look suspicious to a bank) write VOID across the front of the check and the check stub leave voided check in check book or place in special file – do not destroy or throw away

 Deposit Slip:  list checks individually  with top part of ABA #

 -record deposits on next checkstub

 authorized signature on back of check to be deposited  represents a promise to pay  you are saying that the check is good

 limits how a check may be handled

 makes check like cash  anyone can cash it  just a Signature

Cash Account = Checkbook Balance - receipts - payments - journalize - post daily, weekly, or monthly

 Compare Checkbook to Bank Statement  record  service fees  interest  NSF  identify  outstanding checks  deposits in transit

Beginning balance Checks paid by bank (cancelled checks) Checks paid by bank (cancelled checks) Other deductions Other deductions Deposits into the account Deposits into the account Ending balance

 canceled checks  paid, cleared  voided checks  never sent because of error  NSF checks  not paid because of non-sufficient funds  Postdated check  put future date on check

 stop payment order  tell bank not to honor check  Check 21  Check Clearing for the 21 st Century Act  change paper checks to electronic image