Banking Basics
Small paper form used at a bank to document the cash and checks being deposited into a specific account.
What is Deposit Slips
The type of endorsement that is simply a signature, making the check payable to anyone who holds it.
What is blank endorsement?
The three elements that make up the fraud triangle.
What is opportunity, pressure, and rationalization?
The process of proving the cash balance by comparing the bank statement balance and the checkbook balance.
What is bank reconciliation?
A small amount of cash kept on hand for minor, unexpected purchases.
What is petty cash?
The two primary pieces of information required to write a valid check
What is recipient's name and amount?
The type of endorsement that limits what can be done with the check, often writing "For Deposit Only."
What is restrictive endorsement?
The element of the fraud triangle relating to a personal financial need, such as debt or a medical bill.
What is pressure?
The journal entry needed to record a monthly bank service charge.
What is debit to bank service charge and credit to cash?
The document completed every time cash is taken from the petty cash fund.
What is petty cash slip?
A monthly document from the bank that details all transactions in a checking account.
What is bank statement?
The type of endorsement used to transfer ownership of the check to a specific third party by writing "Pay to the order of [Third Party Name]".
What is special endorsement?
The element of the fraud triangle represented by weak internal controls that allow a theft to occur.
What is opportunity?
The journal entry needed after receiving an NSF notice from the bank for a customer's check.
What is debit to accounts receivable and credit to cash
The account debited to establish a petty cash fund.
What is petty cash account?
What do the acronyms EFT and NSF stand for in banking terminology?
What is Electronic Funds Transfer and Non-Sufficient Funds?
An internal control practice that prevents one person from handling all aspects of a cash transaction from start to finish.
What is segregation of duties?
The element of the fraud triangle where the individual justifies their actions, perhaps by thinking, "The company owes me," or "I'm just borrowing the money."
What is Rationalization?
Items known to the business but not yet by the bank when the statement was issued, such as outstanding checks or deposits in transit.
What is reconciling items?
The journal entry made to replenish the petty cash fund involves crediting this account.
What is cash account?
A signature or stamp on the back of a check to show transfer of ownership.
What is endorsement?
Daily cash deposits and using a cash register are examples of these to mitigate fraud.
What is internal controls?
The financial document used to ensure the checkbook, general ledger, and bank statement cash balances all match.
What is bank reconciliation statement?
The general ledger accounts debited when replenishing the petty cash fund for various expenses incurred.
What is expense account?