Class Notes (922,613)
CA (542,889)
UTSC (32,931)
MGA (249)
MGAB01H3 (77)
Liang Chen (34)
Lecture

Use of a Bank

2 Pages
132 Views

Department
Financial Accounting
Course Code
MGAB01H3
Professor
Liang Chen

This preview shows half of the first page. Sign up to view the full 2 pages of the document.
Use of a Bank
¾ The use of a bank contributes significantly to a good internal control over cash. It
acts as a safeguard for cash, a clearing for cheques, and a second set of records. To
open a bank chequing account, the bank runs a credit check and requires the
depositor to sign a signature card. The bank provides the depositor with a book of
serially numbered cheques and deposit slips.
Making Bank Deposits
¾ Each deposit must be documented by a deposit slip. Deposit slips are normally
prepared in duplicate. The original is kept by the bank. The duplicate is stamped by
the bank to establish authenticity, and then kept by the depositor.
Electronic Funds Transfer
¾ To manually control and account for cash is an expensive and time-consuming
process. Therefore, funds are more often transferred among parties as an electronic
funds transfer.
Writing Cheques
¾ A cheque is a written order signed by the depositor that directs the bank to pay a
specified sum to a designated recipient. Each cheque should clearly explain its
purpose.
Bank Statements
¾ $EDQNVWDWHPHQWVKRZVWKHGHSRVLWRU¶VEDQNWUDQVDFWLRQVDQGEDODQFH To the bank,
the cash in the bank account is a liability ± an amount that must be repaid upon
UHTXHVW:KHQPRQH\LVGHSRVLWHGWKHEDQN¶VOLDELOLW\LQFUHDVHV:KHQPRQH\LV
ZLWKGUDZQWKHEDQN¶VOLDELOLW\GHFUHDVHV
¾ Debit Memorandum: The bank charges monthly fees for their service called a bank
service charge. Other bank services that are cost associated include: printing cheques,
LVVXLQJWUDYHOOHVFKHTXHVFHUWLI\LQJFKHTXHVDQGWUDQVIHUULQJIXQGVWRRWKHU
locations. Bounced cheques are also a fee that must be paid.
¾ Credit Memorandum: A depositor may have the bank collect its notes receivable.
7KHEDQNFUHGLWVWKHGHSRVLWRU¶VDFFRXQWIRUWKHFDVKSURFHHGVRIWKHQRWH:KHQ
interest is earned, it may be indicated as a credit memorandum.
Reconciling the Bank Account
www.notesolution.com

Loved by over 2.2 million students

Over 90% improved by at least one letter grade.

Leah — University of Toronto

OneClass has been such a huge help in my studies at UofT especially since I am a transfer student. OneClass is the study buddy I never had before and definitely gives me the extra push to get from a B to an A!

Leah — University of Toronto
Saarim — University of Michigan

Balancing social life With academics can be difficult, that is why I'm so glad that OneClass is out there where I can find the top notes for all of my classes. Now I can be the all-star student I want to be.

Saarim — University of Michigan
Jenna — University of Wisconsin

As a college student living on a college budget, I love how easy it is to earn gift cards just by submitting my notes.

Jenna — University of Wisconsin
Anne — University of California

OneClass has allowed me to catch up with my most difficult course! #lifesaver

Anne — University of California
Description
Use of a Bank The use of a bank contributes significantly to a good internal control over cash. It acts as a safeguard for cash, a clearing for cheques, and a second set of records. To open a bank chequing account, the bank runs a credit check and requires the depositor to sign a signature card. The bank provides the depositor with a book of serially numbered cheques and deposit slips. Making Bank Deposits Each deposit must be documented by a deposit slip. Deposit slips are normally prepared in duplicate. The original is kept by the bank. The duplicate is stamped by the bank to establish authenticity, and then kept by the depositor. Electronic Funds Transfer To manually control and account for cash is an expensive and time-consuming process. Therefore, funds are more often transferred among parties as an electronic funds transfer. Writing Cheques A cheque is a written order signed by the depositor that directs the bank to pay a specified sum to a designated re
More Less
Unlock Document


Only half of the first page are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


OR

Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit