Transcript No Slide Title

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?
Section 1 Banking Procedures
What You’ll Learn
 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.
Section 1 Banking Procedures (cont'd.)
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
Section 1 Banking Procedures (cont'd.)
Protecting Cash
It is important to protect cash
from loss, waste, theft, forgery,
and embezzlement.
Section 1 Banking Procedures (cont'd.)
Protecting Cash
(cont'd.)
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.
Section 1 Banking Procedures (cont'd.)
Protecting Cash
(cont'd.)
EXTERNAL CONTROLS
1. Verify signatures on checks.
2. Maintain records of
transactions.
Section 1 Banking Procedures (cont'd.)
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.
Section 1 Banking Procedures (cont'd.)
Making Deposits to a Checking
Account
Businesses make regular deposits to
protect the currency, coins, and checks
received.
Section 1 Banking Procedures (cont'd.)
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.
Section 1 Banking Procedures (cont'd.)
Recording Deposits in the
Checkbook
Deposits
New Balance
Section 1 Banking Procedures (cont'd.)
Writing Checks
Enter amount
Enter payee
Enter date
Enter payee
Enter purpose
Enter new balance
Enter amount
Enter date
Enter amount
Sign the check
Enter dollar amount in words
Section 1 Banking Procedures (cont'd.)
Voiding a Check
Writing the word “Void” in
large letters across the front of a
check (in ink) is known as voiding
a check.
Section 1 Banking Procedures (cont'd.)
Check Your Understanding
Cash is protected through
internal controls and external
controls. Describe controls over
cash.