Chapter 9 Terms

Question 1

Bank Reconciliation Statement

Answer 1

A statement that accounts for all differences between the balance on the bank statement and the book balance of cash.

Question 2

Blank Endorsement

Answer 2

A signature of the payee written on the back of the check that transfers ownership of the check without specifying to whom or for what purpose.

Question 3

Bonding

Answer 3

The process by which employees are investigated by an insurance company that will insure the business against losses through employee theft or mishandling of funds.

Question 4

Canceled Check

Answer 4

A check paid by the bank on which it was drawn.

Question 5

Cash

Answer 5

In accounting, currency, coins, checks, money orders, and funds on deposit in a bank.

Question 6

Cash Short or Over Account

Answer 6

An account used to record any discrepancies between the amount of currency and coins in the cash register and the amount shown on the audit tape.

Question 7

Check

Answer 7

A written order signed by an authorized person instructing a bank to pay a specific sum of money to a designated person or business.

Question 8

Credit Memorandum

Answer 8

A form that explains any addition, other than a deposit, to a checking account.

Question 9

Debit Memorandum

Answer 9

A form that explains any deduction, other than a check, from a checking account.

Question 10

Deposit In Transit

Answer 10

A deposit that is recorded in the general journal but that reaches the bank too late to be shown on the monthly bank statement.

Question 11

Deposit Slip

Answer 11

A form prepared to record the deposit of cash or checks to a bank account.

Question 12

Dishonored (NSF) Check

Answer 12

A check returned to the depositor unpaid because of insufficient funds in the drawer’s account; also called an NSF check.

Question 13

Drawee

Answer 13

The bank on which a check is written.

Question 14

Drawer

Answer 14

The person or firm issuing a check.

Question 15

Electronic Funds Transfer (EFT)

Answer 15

An electronic transfer of money from one account to another.

Question 16

Endorsement

Answer 16

A written authorization that transfers ownership of a check.

Question 17

Full Endorsement

Answer 17

A signature transferring a check to a specific person, firm, or bank.

Question 18

Negotiable

Answer 18

A financial instrument whose ownership can be transferred to another person or business.

Question 19

Outstanding Checks

Answer 19

Checks that have been recorded in the general journal but have not yet been paid by the bank.

Question 20

Payee

Answer 20

The person or firm whom a check is payable.

Question 21

Postdated Check

Answer 21

A check dated some time in the future.

Question 22

Promissory Note

Answer 22

A written promise to pay a specified amount of money on a specific date.

Question 23

Restrictive Endorsement

Answer 23

A signature that transfers a check to a specific party for a stated purpose.

Question 24

Service Charge

Answer 24

A fee charged by a bank to cover the costs of maintaining accounts and providing services.

Question 25

Statement of Account

Answer 25

A form sent to a firm’s customers showing transactions during the month and the balance owed.