Pretty Profitable
The person who writes and signs the check.
Drawer
A charge made by the bank for maintaining an account.
Bank Service Charge
Checks that have been issued but not yet cleared by the bank.
Outstanding Checks
Deposits recorded by the company but not yet recorded by the bank.
Deposits in Transit
The process of matching the company’s cash record with the bank’s record.
Bank Reconciliation
The statement that shows changes in the owner's capital during a certain period.
Statement of Changes in Equity (SCE)
The additional money or property added by the owner to the business.
Additional Investment
The business form owned by only one person.
Sole Proprietorship
The distribution of income to stockholders in a corporation.
Dividend
The first investment made by the owner in the business.
Initial Investment
A check that has not been encashed for six months or more.
Stale Check
A report that shows the depositor’s transactions and balance from the bank.
Bank Statement
The government agency where partnerships are registered.
Securities and Exchange Commission (SEC)
The situation when a bank account has not enough funds to cover a transaction.
Non-Sufficient Funds (NSF)
The form of business owned and controlled by its members with equal voting rights.
Cooperative
Who is the “Father of Accounting?”
Luca Pacioli
These are accounts related to another account and are presented as a deduction to the related accounts. (ex: Allowance for Bad Debts)
Contra account
A system where all transactions are recorded in two parts: debit and credit. In order for the accounting equation to be balanced.
Double-entry System
If the unadjusted bank balance is P340,000, and there are P60,000 worth of deposits in transit and P100,000 outstanding checks, what is the adjusting bank balance?
P300,000
Unadjusted Bank Balance + Deposits in Transit - Outstanding checks
If the owners invest a personal printer to their business, what are the two account titles affected?
Owner’s Capital and Office Equipment
This term refers to an interest-bearing fund maintained at a bank for a fixed period of time. (Similar to a savings account but earns a higher interest rate)
Time Deposit or Certificate of Deposit or term deposit
Unadjusted Book Balance: P256,000
Interest Earned: P90,000
Notes Receivable collected by Bank: P300,000
Deposits in Transits: P250,000
What is the adjusted book balance?
P646,000
Unadjusted Book Balance + Interest Earned + Notes Receivable
A check dated at a later date.
Postdated Check
What method of preparing a bank reconciliation statement is used when the bank balance is adjusted to agree with the book balance?
Bank to Book Method
A check dated at an earlier date.
Antedated Check