Chapter 7 (part 2) Flashcards
What is included in cash?
-checking accounts, cash on hand, and petty cash
- treasury bills
- commercial paper
- money market
Restricted Cash
-separate account but still an asset
Bank Reconciliation Points
- done on timely basis (preferably monthly)
- an internal control procedures
- probably will need to make journal entries
-to record revenues and expenses in proper period and to correctly state cash to reflect timing difference and any errors
Banking Statement Treatment
- By Bank
- By Us
- treated as liability
- treated as liability
Electronic Funds Transfer
-online paying and receiving money
Deposit in Transit
business made deposit at bank,recorded it in their records but it is not yet on the banks records
O/s Check
business has written and recorded check but it has not yet cleared their bank account. Clearing means that the bank has provide the money to payee(holder) and deducted from the (payor(maker)
NSF
- non-sufficient funds
- bouncing a check
Entry for Deposit
Dr:Cash
Cr: Accounts Receivable
when returned NSF entry
Dr: Accounts Receivable
Cr: Cash
Line of Credit
Pre-established loan that will back up your checking account in case you need funds quickly
-write a check to draw on
The Procedure
check handout
When are you said to be in balance or reconciled
when 2 adjusted book balances equal
-then add to all other types of cash accounts
petty cash
cash used to pay relatively small amounts
