1. Cash Control and Banking Activities
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. $ $ $ $ Section 1 Banking Procedures What You’ll Learn Chapter 11
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. $ $ $ $ Why It’s Important Key Terms Chapter 11 internal controls
Section 1 Banking Procedures (con’t.)
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 (con’t.)
Chapter 11 $
Protecting Cash
It is important to protect cash from loss, waste, theft, forgery, and embezzlement. $ $ $

5. $ $ $ $ Protecting Cash (con’t.) Chapter 11 INTERNAL CONTROLS
Section 1 Banking Procedures (con’t.)
Chapter 11 $
Protecting Cash (con’t.)
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. $ $ $ $ Protecting Cash (con’t.) Chapter 11 EXTERNAL CONTROLS
Section 1 Banking Procedures (con’t.)
Chapter 11 $
Protecting Cash (con’t.) $
EXTERNAL CONTROLS
1. Verify signatures on checks.
2. Maintain records of transactions. $ $

7. $ $ $ $ Opening a Checking Account Chapter 11
Section 1 Banking Procedures (con’t.)
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. $ $ $ $ Making Deposits to a Checking Account Chapter 11
Section 1 Banking Procedures (con’t.)
Chapter 11 $
Making Deposits to a Checking Account
Businesses make regular deposits to protect the currency, coins, and checks received. $ $ $

9. $ $ $ $ Endorsing Checks Chapter 11
Section 1 Banking Procedures (con’t.)
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. $ $ $ $ Recording Deposits in the Checkbook Chapter 11 Deposits
Section 1 Banking Procedures (con’t.)
Chapter 11 $
Recording Deposits in the Checkbook $ $
Deposits
New Balance $

11. $ $ $ $ Writing Checks Chapter 11
Section 1 Banking Procedures (con’t.)
Chapter 11 $
Writing Checks
Enter amount
Enter date
Enter payee $
Enter payee
Enter date
Enter purpose
Enter amount $ $
Enter new balance
Sign the check
Enter amount
Enter dollar amount in words

12. $ $ $ $ Voiding a Check Chapter 11
Section 1 Banking Procedures (con’t.)
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 2 Reconciling the Bank Account What You’ll Learn
Chapter 11 $
Section 2 Reconciling the Bank Account
What You’ll Learn
Why a business reconciles a bank statement.
How to journalize and post entries relating to bank service charges.
The accounting procedure for stopping payment on a check.
How to record an NSF check.
How electronic funds transfer systems enable banks to transfer funds quickly and accurately. $ $ $

14. $ $ $ $ Why It’s Important Key Terms Chapter 11 bank statement
Section 2 Reconciling the Bank Account (con’t.)
Chapter 11 $
Why It’s Important
Reconciling the bank account ensures that a business owner is aware of all transactions that affect cash. $
Key Terms
bank statement
canceled checks
reconciling the bank statement
outstanding checks
outstanding deposits
bank service charge
stop payment order
NSF check
electronic funds transfer system (EFTS) $ $

15. $ $ $ $ Proving Cash Chapter 11 General Ledger Checkbook Cash in =
Section 2 Reconciling the Bank Account (con’t.)
Chapter 11 $
Proving Cash $
General Ledger
Cash in
Bank account
Checkbook
Balance = $ $

16. $ $ $ $ The Bank Statement Chapter 11
Section 2 Reconciling the Bank Account (con’t.)
Chapter 11 $
The Bank Statement
A bank statement is an itemized record of all the transactions in a depositor’s account over a given period, usually a month. $ $ $

17. $ $ $ $ The Bank Statement (con’t.) Chapter 11
Section 2 Reconciling the Bank Account (con’t.)
Chapter 11 $
The Bank Statement (con’t.)
Beginning balance
Ending balance $ $ $
Checks paid by bank
(cancelled checks)
Other
deductions
Deposits into
the account

18. $ $ $ $ Reconciling a Bank Statement Chapter 11
Section 2 Reconciling the Bank Account (con’t.)
Chapter 11 $
Reconciling a Bank Statement
Documents the differences between the bank balance and the checkbook balance. $ $ $

19. $ $ $ $ Recording Bank Service Charges Chapter 11
Section 2 Reconciling the Bank Account (con’t.)
Chapter 11 $
Recording Bank Service Charges
A bank service charge is an expense that is recorded in the accounting records. $
Closing Entry (con’t.)
On November 1 Roadrunner received the bank statement. A bank service charge of $8 appeared on the statement. $
JOURNAL ENTRY $