Q7SE - Horngren'S Financial And Managerial Accounting

Question

Question: Understanding bank account controls

Answer the following questions about the controls in bank accounts:

Requirements

1. Which bank control protects against forgery?

2. Which bank control reports the activity in the customer’s account each period?

3. Which bank control confirms the amount of money put into the bank account?

Step-by-Step Solution

Answer

1. Signature card
2. Bank statement
3. Deposit ticket

Step 1: Definition of the bank

A bank is a type of association that provides the facility of money deposit to its customer.

Step 2: Bank control protects against forgery

The signature card is the document that protects against forgery. Because in signature cash, the signature of the authorised person is taken, and without the signature of the authorised person, no transaction is made.

Step 3: Bank controls report the activity of the customer

The bank statement is the document that reports the activity of the customer. It reports each deposit and withdrawal made by the customer of the period. A complete record of the customer activity is kept by the bank. Hence, in this way, the bank statement reports customers’ activity.

Step 4: Bank control confirms the amount of money put into the bank account

The deposit ticket is the bank control that confirms the amount of money put into the bank account. The customer fills this ticket while he deposits the money, and the cashier also attests this ticket. Hence, this control confirms the money put into a bank account.