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K. Salvevold Accounting

Learn how businesses protect their cash from loss, waste, theft, forgery, and embezzlement through internal and external controls. Discover the advantages of using a bank and the process for writing checks and making deposits.

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K. Salvevold Accounting

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  1. Cash Control & Banking Activities K. Salvevold Accounting

  2. Protecting Cash • It is important to protect cash from loss, waste, theft, forgery, and embezzlement • Cash is protected through internal and external control

  3. How would YOU protect your cash if you were a business owner?

  4. Internal Controls • Limit the number of persons handling cash • Separate accounting tasks involving cash • Bond (insure) employees who handle cash or cash records

  5. Internal Controls (continued) • Use a cash register and a safe • Deposit cash receipts in the bank daily • Use checks to make all cash payments

  6. External Controls • Verify signatures on checks • Maintain records of transactions • Use a bank

  7. Advantages of Using a Bank • Minimizes the amount of cash that must be kept on hand • Provides a double record of all bank transactions • one by the business • one by the bank • Helps a company safeguard its cash by using a bank as a depository and clearinghouse for checks received and written

  8. Using A Checking Account • Allows a person or business to deposit cash 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

  9. Payee The ABA Number Drawee Drawer MICR Number Parts of a Check

  10. 4. Write the Date 1. Enter Amount, Date, Payee, & Purpose 6. Enter amount 5. Write the Payee 2. Subtract the Check 8. Sign the Check 3. Enter New Balance 7. Enter the dollar amount in words Writing Checks

  11. Deposits • Most businesses make daily deposits • businesses do not like to keep a lot of cash on hand (internal control) • Deposits are accompanied by a deposit slip • gives the depositor and the bank a detailed record

  12. 2. List total amt. of cash and coin 1. Write the Date 3. List checks singly by ABA # 4. Total cash and checks Making Deposits to an Account

  13. Write the amount of the deposit & the date Total Recording Deposits **Leave the rest of the check stub blank until it is time to write the next check.**

  14. “Checking” Your Understanding • Why is it important to protect cash? • What internal controls does a business use to protect cash? • What external controls does a business use to protect cash? • What is the ABA number and where is it located on a check? • What is the process for writing checks? • What is the process for making a deposit?

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