2. Banking and Accounting Procedures
Banking Procedures
Accounting Procedures
Ethics in Accounting Procedures
International Currency Exchange
3. Banking Procedures
Checks
Establish checking account at bank
Transfer of funds–ordinary checks
Check–written by depositor
Drawer–also called maker; person who writes a check
Drawee–bank from which check is drawn
Payee–person to whom the check is written
4. Banking Procedures
Cashier’s
Also
(continued)
Check
known as treasurer’s check or official check
Written
by an authorized officer of bank on its own
funds
Guarantees payment to payee by drawer’s bank
Depositor obtains official check by writing bank a check on his/her
funds for amount plus fee
5. Banking Procedures
(continued)
Bank Draft
Check drawn by bank on its own funds in another bank located either in
same city or another city
Made payable to third party, and upon endorsement, may be cashed at
bank on which it is drawn
8. Banking Procedures
(continued)
Electronic funds transfer (EFT)
Delivery system for electronic transactions
No lost or stolen checks
Payment made quickly and on time
Major services—EFT, ATMs, centers for electronic funds transfers,
payment by telephone
9. Banking Procedures
(continued)
Automated teller machines (ATMs)
Many convenient locations
Customers can obtain cash or make deposits
Requires EFT card and personal identification number (PIN) or
password
10. Banking Procedures
(continued)
Debit card
Used in place of checks
Money is taken directly from the individual or company’s checking
account
May be used as debit card or credit card
When used as a debit card, requires a pin number or password; when
used as a credit card must sign sales slip
11. Banking Procedures
(continued)
Direct Payroll Deposit
Organization
pays employees without checks
Organization
provides bank with magnetic tape
description of payroll disbursements made to the
employees
Employee
receives statement from company or
third party
Statement shows gross payment, type and amount of deductions, and
net payment
13. Banking Procedures
(continued)
Automatic debits
Preauthorized automated transfer of funds from one account to
another account within same financial institution
For an individual or company
From checking or savings
Example: Payment of utilities
Copy of canceled check, account number and signature authorizing
transfer is required
14. Banking Procedures
(continued)
Web banking
Must have access to Internet
Primary functions
Easy online management of banking transactions
Ability to make electronic transfers
Provides real-time information
Software/password to access may be needed
Requires ID
15. Banking Procedures
(continued)
Telephone transfers
Call the company, provide nine-digit routing number of bank, bank
account number, check number, and amount
May be charged a fee
Company will draft the amount from your checking account and bank
honors check
Payment can be made on exact due date, avoiding late charges
17. Banking Procedures
(continued)
Endorsing Checks
Check presented for cash or deposit must be signed (endorsed)
By the payee
On reverse side of check
Bank will accept for deposit checks that have been endorsed by
representative of payee
Endorsement can be rubber stamped or handwritten in ink
21. Banking Procedures
(continued)
Full endorsement
Also called a two-party check
Transfer check to specified person or organization
“Pay to the order of” followed by name of person/organization
receiving funds is written on check preceding signature of endorser
22. Banking Procedures
(continued)
Bank deposits
Preparing the cash/coin
Coin values per roll
Currency preparation
Arrange all president’s faces going in same direction
Strap all currency that meets required amounts
Separate by denomination
Each strap must contain same denomination
Preparing the deposit slip
23. Bank Statement Reconciliation
Statement
issued by bank to depositor
Shows previous month’s balance, deposits, checks paid, bank charges,
and ending balance
Comparison
of bank balance on the statement
with the checkbook balance
To make comparison, checks listed on statement are checked off in
check register
24. Bank Statement Reconciliation
(continued)
Steps to reconcile bank statement
Record in the company’s checkbook all automatic transactions not
previously entered
+ any interest earned
+ automatic deposits
- service charges
- automatic payments
- telephone transfers and charges
25. Bank Statement Reconciliation
Enter
(continued)
in company’s checkbook register a check
mark for each canceled check and all deposits
received by the bank listed on the bank
statement
Total all outstanding checks (not paid by bank)
Total all deposits shown in checkbook register
that are not on bank statement
26. Bank Statement Reconciliation
Adjust
(continued)
the bank statement balance
Enter
the checking account balance shown on front of
bank statement
Add
any deposits not yet shown on statement
Subtract
The
the total of outstanding checks
adjusted bank statement balance from the
reconciliation should agree with the adjusted
checkbook balance
27. Bank Statement Reconciliation
(continued)
If the adjusted bank statement balance and checkbook balance do
not agree, follow these steps:
Find the difference between the two
Check the bank statement balance for errors
Look for omission of checks and deposits
Check for a math error in the check stubs
28. Accounting Procedures
Petty cash fund
Established for small office expenditures
Used for things such as
Messenger
service, postage due on a package, or emergency
purchase of office supplies
All
expenses must be accounted for
Balance petty cash fund regularly
Keep the cash and completed vouchers in a box or
envelope and put them in a safe place
Prepare a petty cash voucher for each expenditure made
Keep an accurate petty cash record, book, or distribution
sheet for each period; record each transaction in this
record
29. Accounting Procedures
(continued)
Replenish
the petty cash fund periodically or soon
enough to keep an adequate supply of cash on hand
To
replenish the petty cash fund, balance the petty
cash record, formally request a check for the
amount needed to bring the fund amount back to its
beginning balance
Submit
records called for by the accounting
department
Cash
the check and enter the beginning amount on
the first line of the “Explanation” column of the petty
cash record
31. Accounting Procedures
Completing
(continued)
a payroll register
In
the payroll register, enter the employee’s
information—name, marital status, number of
withholding allowances, hourly rate, regular hours
worked and overtime hours worked
Calculate
regular earnings
Calculate
overtime earnings
Add
regular and overtime earnings to determine gross
earnings
32. Accounting Procedures
Calculate
(continued)
social security (OASDI) by multiplying gross
earnings by 6.2%
Calculate Medicare by multiplying gross earnings by
1.45%
Look up federal income tax in tax tables obtained from
Circular E Employer’s Tax Guide if not provided for
you
Enter any other deductions in the payroll register
Total all deductions
Subtract deductions from gross pay to determine net
pay
Checks are written for the net pay amount to each
employee
33. Accounting Procedures
(continued)
Financial statements
Income Statement
Operating statement also called profit and loss statement showing money
earned and expenses incurred
Balance Sheet
Summarizes the balances of the assets
Reports what a company is worth on any one given day
Assets, liabilities, and owner’s equity
34. Accounting Procedures
(continued)
Budgeting
Process of planning future business operations and defining those plans,
expressed in financial terms in a formal report
Estimate of income and expenses of all areas of organization for a
certain period of time (month or year)
36. Accounting Procedures
(continued)
Office supplies inventory
Record of supplies on hand
Perpetual inventory record
Inventory each item
Keep balance accurate
Add to item when ordering more
Subtract from item when removing
Decide if balance on hand is sufficient or if time to replenish
37. Accounting Procedures
Accounting
Handles
Typically,
How
department
cost control for company
Budgets
Which
(continued)
have account titles and numbers
managers are responsible for their area
accounts are used most often?
accounts may be used?
Correct
procedures for ordering and spending
Allowable expenses
Department code to use
38. Ethics in Accounting Procedures
Auditors
and accountants create the financial
statements and must be the watch-dogs for
accurately reporting information
Ethics is stressed in the accounting field by
requiring CPAs to take an ethics course once
every three years
High ethical standards are required in every
phase of the office professional’s job
39. International Currency Exchange
Necessary when manager travels abroad
Locate current exchange rate
Call local banks
Available via Internet
At airports with international flights
Exchange rates are quoted per $1 U.S
