7.3 Bank Accounts Flashcards
why do companies use banks
because this minimizes amount of cash that must be kept on hand, and bank statements provide a second record of cash transactions!
when do companies use online banking
-to authorize employees to monitor account balances/transaction
-transfer funds
-make online payments
-deposit heques
-view acct details
-download transactions into accounting software (for bank reconciliation)
what is shown on a bank statement
-transcctions for th emonth
-account balance at month end
WHAT IS THE ABSOLUTELY MOST CRITICAL THING???? IN BANK STATEMENTs?
Cash is a normal debit balance for a company
FOR A BANK, CASH DEPOSITED IS A LIABILITY!!!!! SO NORMAL CREDIT BALANCE!!!
IN A BANK ACCOUNT FROM A BANKS PERSPECTIVE, CASH DEPOSITED IS A DR OR CR?
CR (cUZ INCREASE IN LIABILITY)
IN A BANK ACCOUNT FROM A BANKS PERSPECTIVE, CASH WITHDRAWN IS A DR OR CR?
DR!!!! because decrease in liability
If transaction is deducted from bank acc, on bank statement DR or CR
DR
If transactions were added to bank account, Dr or CR
CR liability
if a company makes na electronic payment or writes a cheque, the bank is paying out this amount
how is it recorded (Dr or cr)
DR
if a company is recieving electronic colletcion or deposit money into its bank acc, how is it shown in bank statment
CR
What are amounts deducated from a bank account
DEBITED
Examples of all amounts deducted from a bank account (debited accounts)
4 types
1) EFT payments: deposit payments to employee salaries or to recurring payments (insurance rent loan etc)
2) Cheques: written order signed by an employee that tells bank to pay a aspecific amount to a payee
3) NSF cheques: non sufficient funds cheque, customer cheque that has been deposited but RETURNED by the bank
4) service fees: service fees charged for transactions processed using debit and bank credit cards
what are nsf cheques
when a customer signs a cheque to the company but they do not have neough money to pay the cheque “the cheque has bounced”
the company credits cash because it decreased and the bank debits the amount
What are amounts added to a bank account (Credits)
1) EFT deposits
2) deposits made at the bank
3) interest: any money earned on the money in the account
4) other transfers: amounts recieved by the company from operating lines of credit and funds recieved from any new bank loans taken out
how can a bank reccord and company record disagree:
1) timing differences
2)errors
how can timing differences make discrepancy between bank and company records
->outstanding cheques
->depsotis in transit
