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Accounting – Chapter 5

Accounting – Chapter 5. Cash Control Systems. ETHICAL DECISIONS: Business Codes of Conduct. Read aloud “How Businesses Use Cash” Txtbk p. 118 Read Making Ethical Decisions: Business Codes of Conduct Merck Code of Conduct

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Accounting – Chapter 5

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  1. Accounting – Chapter 5 Cash Control Systems

  2. ETHICAL DECISIONS: Business Codes of Conduct • Read aloud “How Businesses Use Cash” • Txtbk p. 118 • Read Making Ethical Decisions: Business Codes of Conduct • Merck Code of Conduct • Activity: Read other company’s codes of conduct and compare and contrast them

  3. 5-1 Checking Accounts • Checking account: a bank account from which payments can be ordered by a depositor • Opening an account: • Signature cards

  4. DEPOSITS Txtbk p. 119 • Deposit slips • Vary by bank • Checks are listed with their routing number • 24- 108 • Receive a receipt from bank w/ printed verification • Deposits are recorded on a check stub • Date • Amount • New balance • Deposits are compiled cash receipts • All journal entries for the receipts have been made previously

  5. ENDORSEMENTS Txtbk p. 120 • Endorsement – a signature or stamp on the back of a check transferring ownership • Signature should be exactly as appears in payee line • Followed by official signature • Blank Endorsement – Only the endorser’s signature • If lost or stolen, can be cashed by anyone in possession • Special Endorsement – Indicates a new owner of a check • “Pay to the order of” and name of new owner • Can only be cashed by the person or business named • Restrictive Endorsement – limits use of the check to purpose stated • “For Deposit Only” • Often a stamped endorsement Which has most security and would most often be used in transacting business?

  6. CHECKS Txtbk pp. 121 • Preprinted • Numbered • What is the benefit of having numbered checks? • Help keep track of all checks to assure none are lost or misplaced • Prepare check stub first, write check 2nd • Why? • Ensures that the check information is recorded

  7. Preparing Check Stubs & ChecksTxtbk pp. 121 • The check stub: • Amount • Date • Payee • Purpose • Amount of check written in words • Calculate new balance • The check: • Date • Do not postdate • Payee • Amount • Amount in words • Purpose of check

  8. VOIDED CHECKS Txtbk p. 122 • When to void a check • An error in preparing the check • How to void a check • Write VOID in large letters across the check stub and the check • Recording a voided check • In journal • Date • VOID in Account title • Check # in Doc. No. • Checkmark in Post. Ref. column • Dash in Cash Credit Column Why can’t we just throw away a voided check?

  9. PRACTICE! • WP pp. 93, Txtbk p. 123 • HOMEWORK: OYO 5-1 • WP pp. 94, Txtbk p. 123 • APP Problem: 5-1

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