Chapter 2 Flashcards
Bank Reconciliation
deposits are covered by deposit slips and where funds are withdrawable on demand by drawing checks against the bank.
Demand deposit
the depositor is given a passbook upon the initial deposit. The passbook is required when making deposits and withdrawals.
Saving deposit
similar to saving deposit in the sense that it is interest bearing. It is evidenced by a formal agreement embodied in an instrument called certificate of deposit.
Time deposit
is a statement which brings into agreement the cash balance per book and cash balance per bank
bank reconciliation
a monthly report of the bank to the depositor
bank statements
items not representing deposits credited by the bank to the account of the depositor but not yet recorded by the depositor as cash receipts
Credit memos
items not representing checks paid by bank which are charged or debited by the bank to the amount of the depositor but not yet recorded by the depositor as cash disbursements.
Debit memos
checks deposited but returned by the bank because of insufficiency of fund.
NSF (no sufficient fund) or DAIS (drawn against insufficient fund)
checks deposited but returned by the bank because of technical defects such as absence of signature or countersignature, erasures not countersigned, mutilated checks.
Technically defective checks
include bank charges for interest, collection, checkbook and penalty
Bank service charges
amount deducted from the current account of the depositor in payment for loan which the depositor owes to the bank and which has already matured
Reduction of loan
collections already recorded by the depositor as cash receipts but not yet reflected on the bank statement
Deposits in transit
checks already recorded by the depositor as cash disbursements but not yet reflected on the bank statement
Outstanding checks
a check where the bank has stamped on its face the word accepted or certified indicating sufficiency of fund
Certified check
under this method, the book balance and the bank balance are brought to a correct cash balance that must appear on the balance sheet
Adjusted balance method
under this method, the book balance is reconciled with the bank balance or the book balance is adjusted to equal the bank balance
Book to bank method
under this method, the bank balance is reconciled with the book balance or the bank balance is adjusted to equal the book balance
Bank to book method
