bank reconciliation

process of identifying differences between the cash bank balance and company record for a specified period of time

bank statement

document from the bank showing account activity for the month including deposits, checks cleared, notes collected, interest income, and service charges to the account

cash equivalents

short-term assets that can be quickly converted to cash within 30 to 90 days

cash short and over account

account used to record the shortages and overages in cash balances

change fund

amount of cash used to provide change to customers


prenumbered document stating an amount to be paid from the designated bank account by one individual or company to another

compensating balance

specified minimum account balance required by the bank or other lender for the company to receive certain benefits, such as an unsecured loan

deposit in transit

deposit that has been received by the company but is not yet shown on the bank statement because of the timing of the deposit

electronic funds transfer (EFT)

electronic transfer of funds from one financial institution to another

outstanding check

check that has been issued but has not yet cleared the bank

petty cash fund

special-purpose fund used for small business expenses, to avoid writing checks

remittance advice

form containing information about the amount paid, such as invoice number, amount remitted, and total invoice amount. It is issued by the company and is usually included when sending the invoice to the customer.

signature card

form that provides documented authorization for a specific person to sign checks

special-purpose fund

funds set aside for special business needs


form used to document and verify a payment authorization

voucher system

system used to document payment authorizations