Chapter 10 Flashcards
canceled checks
a check amount of which has been subtracted from the depositor’s account and has been marked as canceled by a financial institution
check clearing act for the 21st century
this act allows financial institutions to create and process electronic substitute checks in place of customer written hard-copy checks to decrease time for check clearing
cutoff bank statement
a bank statement covering a specified number of business days after the client’s balance sheet date
derivatives
financial instruments that derive their value from other financial instruments, underlying assets, or indexes
electronic data interchange
a computer network between companies that allows the interchange of data from one company’s computer to the other’s
electronic funds transfer system
a computer system that transmits and processes funds related cash disbursement and receipt transactions
kiting
manipulations causing an amount of cash to be included simultaneously in the balance of two or more bank accounts, based on the float period
lockbox
a post office box controlled by a company’s bank at which cash remittances from customers are received
proof of cash
an audit procedure that reconciles the bank’s record of cash activity with the client’s accounting records for a test period- four column bank reconciliation
standard confirmation form
agreed to by the AICPA, American Bankers Association, and Bank Admin Institute designed to provide corroborating evidence about the client’s account balances and outstanding loans
voided check
check that is not negotiable usually an error in preparing the check
voucher
doc authorizing a cash disbursement
voucher registration
special journal used to record the liabilities for payment originating in a voucher system. debit is cost distribution credit vouchers payable, every one corresponds to a future payment of cash
window dressing
action taken by the client shortly before the balance sheet date to improve the financial picture presented in the financial statements
