POWERPOINT CHAPTER 7

POWERPOINT CHAPTER 7 - CHAPTER SEVEN ACCOUNTING FOR CASH...

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CHAPTER SEVEN ACCOUNTING FOR CASH
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CASH Includes: Currency, coins, and checking accounts Checks received from customers Money orders Bank cashier’s checks Because cash plays such a central role in operating a business, it must be carefully managed and controlled.
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INTERNAL CONTROL A set of procedures designed to ensure proper accounting for transactions Good internal control for cash transactions: All cash received should be deposited DAILY in a bank. All disbursements, except for payments from petty cash, should be made by CHECK.
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OPENING A CHECKING ACCOUNT Each person authorized to sign checks must complete and sign a SIGNATURE CARD. This card is used to verify the depositor’s signature on any banking transactions.
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MAKING DEPOSITS Deposit Ticket is a form showing A detailed listing of items being deposited Currency, coins, and checks are listed separately. Each check should be identified by its ABA number. American Bankers Association number Found in upper right hand corner of check Also shown in MICR code on the lower left side of front of each check ABA number is used to sort and route checks.
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MAKING DEPOSITS Endorsements--each check being deposited must be endorsed by the depositor. Blank endorsement--the depositor simply signs the back of the check. Check becomes payable to any bearer. Restrictive endorsement--depositor adds words such as “For deposit,” “Pay to any bank,” or “Pay to Mary Adams only.”
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AUTOMATED TELLER MACHINES Each depositor has a plastic card and a personal identification number (PIN). Most ATMs are on a system that allows non-customers to use their ATMs. It is important for depositor to keep an accounting record of ATM withdrawals and deposits.
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WRITING CHECKS Check is a document ordering a bank to pay cash from a depositor’s account. Three parties to every check: Drawer--the depositor who orders the bank to pay the cash Drawee--the bank on which the check is drawn Payee--the person being paid the cash Business checks often have a check stub.
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3 STEPS IN PREPARING A CHECK Step #1 Complete the check stub or register. Step #2 Enter the date, payee name, and amount on the check. Step #3 Sign the check. The check should not be signed until the check signer has verified that all aspects of the check are correct.
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BANK STATEMENT Includes: The balance at the BEGINNING of the period Deposits and other amounts ADDED during the period Checks and other amounts SUBTRACTED during the period The balance at the END of the period
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BANK STATEMENT Sent with bank statement Canceled checks, “imaged” sheets of check faces, or a listing of checks Any other forms representing items added to or subtracted from the account
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Bank statement shows a balance of $4,350 . But the general ledger account has a balance of $3,800. We need to prepare a
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POWERPOINT CHAPTER 7 - CHAPTER SEVEN ACCOUNTING FOR CASH...

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