Unit 9: Accounting Practice Sets

Lesson 9.1
Accounting Practice Sets - Banking Statements
Contents
Introduction 1

Learning Objectives 2

Quick Look 3

Learn the Basics 4

Review of Different Bank Forms 4
Deposit Slips 4
Withdrawal Slips 7
Bank Checks 8
Linking Bank Forms to Business Transactions 9
Journal Entries 9
Bank Forms Used in the Transactions 10

Keep in Mind 12

Try This 13

Practice Your Skills 14

Challenge Yourself 16

Photo Credit 17

Bibliography 17
Unit 9: Accounting Practice Sets

Lesson 9.1

Accounting Practice Sets - Banking

Statements

Introduction

You are already familiar with the different banking documents, such as the deposit slip,
withdrawal slip, and bank checks. Knowing how to accomplish these forms will be beneficial
in personal finance management.

In accounting, these banking documents are essential in business operations. They serve as
evidence of transactions between the bank and its clients. You have learned that having a
trail of documents establishes better internal control.

In this lesson, you will apply the steps in the accounting cycle by preparing bank forms and
analyzing the financial statements.

9.1. Accounting Practice Sets - Banking Statements 1

Unit 9: Accounting Practice Sets

Learning Objectives DepEd Competency

Perform the steps in the accounting cycle, from

At the end of this lesson, you should be able to
the preparation of documents to the
do the following: preparation, analysis, and interpretation of
● Prepare basic banking forms and financial statements (ABM_FABM12-IIe-g-14).

documents.
● Complete and submit the accounting
practice set given for banking
statements.

9.1. Accounting Practice Sets - Banking Statements 2

Unit 9: Accounting Practice Sets

Quick Look

Depositing a Check
ABC Company renders photography services to its clients. To secure the company’s internal
control, the management requested its clients to issue checks as their form of payment and
ABC Company as the name of the payee.

When the company renders its complete services to the client, it bills them and gives its
details to fill in the check correctly by the clients. When the company receives the check, it
makes sure that the payee’s name and the amount are correct so that they can record the
same in accounting books.

These checks received by the company will be deposited to the bank on the same day or the
following day so that the check will be cleared and the amount of money will be credited
right away to the company’s account.

Questions to Ponder
1. What are the reasons why some companies prefer check transactions?
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

2. Why do you think providing the correct information in banking documents is

important?
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

3. How important is keeping the receipts from the banking transactions?

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

9.1. Accounting Practice Sets - Banking Statements 3

Unit 9: Accounting Practice Sets

Learn the Basics

Preparing bank forms is essential to the company's cash flow. These forms serve as evidence
of the transactions that have transpired. This section will review the description, function,
and role of different banking forms in accounting.

Essential Question

Why is there a need to keep a copy of these bank forms and documents?

Review of Different Bank Forms

Three primary bank forms are used in business. Each form depends on what transactions
have occurred in the business.

Deposit Slips
A deposit slip is a bank form used to deposit cash or checks to a specific bank account. An
individual can deposit to his or her account or the account of others. The depositor should
properly indicate the account where the money will be credited when filling out the deposit
slip.

The bank teller will check the pertinent information in the deposit slip for verification. The
receipt will serve as your copy for security purposes if there are possible disputes that may
arise.

9.1. Accounting Practice Sets - Banking Statements 4

Unit 9: Accounting Practice Sets

Fig. 1. A sample of cash deposit slip

9.1. Accounting Practice Sets - Banking Statements 5

Unit 9: Accounting Practice Sets

Fig. 2. A sample of check deposit slip

To correctly fill out the deposit slip, the depositor can follow the steps below:
1. Write the account name and account number where you want the money to be
deposited.
2. Fill out the information about the cash or check you are depositing. If you are
depositing cash, indicate the correct number of pieces and denomination of each bill
and/or coin. If you are depositing a check, indicate the payor’s bank and the check
number. Ensure that the total amount you wish to deposit is correct.
3. Sign the deposit slip and give it to the bank teller. The teller will give you a deposit
receipt as evidence of the transaction.

9.1. Accounting Practice Sets - Banking Statements 6

Unit 9: Accounting Practice Sets

Withdrawal Slips
A withdrawal slip is a bank form that takes cash from a person's account. Only the account
owner or a designated representative can withdraw from an account. The person should
indicate the account name, account number, and correct date in the withdrawal slip.

Fig. 3. A sample of withdrawal slip

If you are the person withdrawing, you may follow these steps:
1. Write the name and number of the account from where you want to withdraw cash.
2. Indicate the amount you want to withdraw.
3. Sign the withdrawal slip. Present a valid identification card (ID) which proves that you
are the account holder. The signature on your ID, withdrawal slip, and bank records
should all be identical.
4. Submit the documents to the bank teller, and receive the cash you have withdrawn
and the receipt.
5. Keep the receipt for your records and as evidence of the transaction.

9.1. Accounting Practice Sets - Banking Statements 7

Unit 9: Accounting Practice Sets
Bank Checks
A bank check is a negotiable instrument that allows the payee to draw funds from a specific
bank account. Since this is a negotiable instrument, the payee can also endorse the same
check to another person who will become the new payee. However, currently, some banks
have policies that completely disallow the acceptance of second-endorsed checks or subject
these checks to stricter control procedures. There are several types of checks, such as
cashier, certified, and payroll checks. These checks can either be converted to cash directly
and may be deposited into an account. The table below shows the parties involved in the
issuance of checks.

Table 1. Parties involved in the issuance of a check

Party Involved Definition

Drawee the party responsible for paying the amount specified in the check;
usually a bank

Drawer the party that obliged the drawee to pay the payee

Payee the party who will receive the sum of money written in the check

Closer Look

Various Bank Forms and Statements

Ana owns a small store. She opens this business to earn income and
establish her savings. Every week, Ana deposits her weekly earnings into
her bank account. She properly fills out the deposit slip, indicating the
correct account name and account number. Ana keeps the deposit
receipts that the bank teller gives her. She uses this to create her records
and verify if they are accurate.

9.1. Accounting Practice Sets - Banking Statements 8

Unit 9: Accounting Practice Sets

Check Your Progress

Explain the importance of banking documents in accounting.

________________________________________________________________________________

________________________________________________________________________________

_______________________________________________________________________________

Linking Bank Forms to Business Transactions

Bank forms and documents are records of transactions. Banking transactions such as
deposits, withdrawals, and issuance of checks affect the business's cash account and,
therefore, its financial records. For instance, a bank receipt may be evidence of collected
sales or payment of purchases and other expenses. Thus, these banking transactions should
be recorded in the journal using the principle of debit and credit.

Journal Entries
Journal entries are chronological records of business transactions. An entry includes the
date of transaction, description, accounts involved, amount of transaction, debit and credit
effects, and reference document.

Journal entries are made for cash transactions that involve the bank. For example, when
credit sales are collected, the clients may issue a check payable to the company. The
accountant should record a debit to cash and a credit to accounts receivable.

In addition, when a company disburses a large sum of money, they often issue a check for
payment. In this case, the accountant should record a debit to expense or payable and a
corresponding credit to cash.

The following shows the journal entries when a company performs a bank transaction.

9.1. Accounting Practice Sets - Banking Statements 9

Unit 9: Accounting Practice Sets
Table 2. Format of transactions recorded in the journal

Date Ref. Account Debit Credit

Jan. 1, J1 Cash xxx

20x1 Revenue xxx
To record cash sales revenue.

J1 Cash xxx
Accounts receivable xxx
To record cash collection from credit sales.

J1 Expenses xxx
Cash xxx
To record payment of expenses.

J1 Accounts payable xxx

Cash xxx
To record payment of purchases on account.

Bank Forms Used in the Transactions

Cash transactions may involve bank transactions. Thus, bank forms become part of the
accounting process, specifically, the recording or journalizing stage.

The table below shows a summary of cash transactions that businesses may be involved in
and the corresponding bank forms that the company can use.

Table 3. Transactions involving banks forms

Transaction Bank Form Used

Receipt of checks from rendering services or delivering goods. Checks

Collection of accounts receivable in the form of a check from sales

Checks
on credit.

Payment of expenses usually in large amounts of money. Checks/Deposit Slip

9.1. Accounting Practice Sets - Banking Statements 10

Unit 9: Accounting Practice Sets

Payment of purchase on account and other payables. Checks/Deposit Slip

Additional investment to be deposited into the company’s bank

Checks/Deposit Slip
account.

Checks/Withdrawal
Withdrawal of cash for owner’s personal use.
Slip

Deposit of checks to bank accounts. Checks/Deposit Slip

Over-the-counter withdrawal from the account. Withdrawal Slip

Closer Look

Connecting Business Transactions and Bank Forms

A new business owner opens his new store. Since he is the one managing
the small business, he is also the one keeping the receipts, recording in
the accounting books, and doing bank transactions.

During the first month of his operations, here are some transactions
involving bank forms:

Transaction Bank Form Used

He received a check from the sale of goods. Checks

He issued checks as payment for major expenses. Checks

He deposited the check in his business account to Checks

secure the check received from his sales. Deposit Slip

He deposited the cash from the month’s income. Deposit slip

He withdrew cash for his petty cash transactions. Withdrawal slip

9.1. Accounting Practice Sets - Banking Statements 11

Unit 9: Accounting Practice Sets

Check Your Progress

Give an example of a bank transaction and how it should be recorded in the

journal.
________________________________________________________________________________

________________________________________________________________________________

_______________________________________________________________________________

Keep in Mind

● Preparing bank forms is essential to the company’s cash flow. These forms serve as
evidence of the transactions that have transpired. Businesses typically use three
primary bank forms: deposit slips, withdrawal slips, and bank checks.
● Bank transactions involve cash transactions. A deposit slip indicates that a specific
amount will be credited to a particular bank account. A withdrawal slip suggests that
an amount will be debited from the bank account. A bank check allows the payee to
draw funds from a bank account.
● Since bank transactions involve cash transactions that affect a company’s financial
position, these documents are involved in the accounting process. Bank transactions
are recorded in the journal entries, and bank forms are kept as source documents or
evidence of transactions.
● The following are bank transactions that need to be recorded in the journals.

9.1. Accounting Practice Sets - Banking Statements 12

Unit 9: Accounting Practice Sets

Transaction Bank Form Used

Receipt of checks from rendering services or delivering

Checks
goods.

Collection of accounts receivable in the form of a check

Checks
from sales on credit.

Payment of expenses usually in large amounts of money. Checks/Deposit Slip

Payment of purchase on account and other payables. Checks/Deposit Slip

Additional investment to be deposited into the company’s

Checks/Deposit Slip
bank account.

Withdrawal of cash for owner’s personal use. Checks/Withdrawal Slip

Deposit of checks to bank accounts. Checks/Deposit Slip

Over-the-counter withdrawal from the account. Withdrawal Slip

Try This

True or False. Write true if the statement is correct. Otherwise, write false.

________________ 1. A deposit slip is filled up to deposit cash or check into a

depositor’s account.

________________ 2. After the banking transaction, it is best to throw the receipt

away.

________________ 3. The person owning the account does not need to sign the
withdrawal slip.

________________ 4. Bank checks are usually negotiable.

9.1. Accounting Practice Sets - Banking Statements 13

Unit 9: Accounting Practice Sets

________________ 5. When a company receives a check as a form of payment, the

company records a debit to a cash account.

________________ 6. A withdrawal slip is where you can find the name of the drawer,
drawee, and payee.

________________ 7. Bank forms and statements can serve as evidence or proof that
a particular transaction occurred.

________________ 8. When depositing a check, the payee is required to affix his or

her signature to the check.

________________ 9. The person's bank account number is crucial when doing a

deposit or withdrawal transaction.

________________ 10. When issuing a check for payment of purchases, it indicates

recording a credit to the cash account.

Practice Your Skills

Knowing Your Bank Forms

John works as a part-time bookkeeper in a small company in their town. He is responsible
for recording the transactions that have occurred in the business. The following transactions
were recorded in their books:
● January 5, 2022: Mr. Peter Santos, the company's owner, made an additional
investment by issuing a check worth ₱200,000. He will deposit this check on the next
business day.
● January 8, 2022: The company issued a check to pay for the supplies purchased on
credit worth ₱50,000.
● January 15, 2022: John went to the bank to withdraw cash over-the-counter, which he
will use for the employees' payroll in the amount of ₱100,000.
● January 23, 2022: The company received a customer's check amounting to ₱30,000
for services to be rendered during the month of January. He will deposit the check

9.1. Accounting Practice Sets - Banking Statements 14

Unit 9: Accounting Practice Sets
within the day.
● January 30, 2022: The company issued a check amounting to ₱30,000 in the name of
Mr. Peter Santos for personal purposes.

The company has a correct cash balance on January 1, 2022, amounting to ₱100,000.

Based on the preceding transactions, answer the following questions.

1. What will be the ending balance of the cash account at the end of January?

2. What bank forms are needed in the transaction on January 5, 2022?

__________________________________________________________________________________________

3. Which date(s) from the given transactions above is(are) needed to use deposit slips?

__________________________________________________________________________________________

4. How much is the total check disbursements based on the given transactions above?

5. Briefly discuss whether or not the company needs to fill out a withdrawal slip for the
transaction on January 30, 2022.
__________________________________________________________________________________________

__________________________________________________________________________________________

__________________________________________________________________________________________

9.1. Accounting Practice Sets - Banking Statements 15

Unit 9: Accounting Practice Sets

Challenge Yourself

Alex, a new entrepreneur, invested P100,000 to finance his start-up business. Alex then
received a bank check with his name written on it with a sum of money amounting to
P200,000 from an investor. Alex opted to open a bank account at that same bank so that he
could safely and conveniently deposit checks and keep track of the business's expenses.

Once in operation, his customer issued checks for large sums to pay for his services. Alex
directly deposits these checks into his account. His business did well for the entire year. At
the end of the year, he decided to withdraw P100,000 over-the-counter for personal use.

Answer the following questions.

1. What will be the journal entry for the cash investment of Alex?

2. What bank form(s) is(are) involved when he received an amount of money from the
investors and decided to deposit this money?

_________________________________________________________________________________________

3. Should Alex issue a withdrawal slip and a check when paying its suppliers? Why or
why not?
_________________________________________________________________________________________

_________________________________________________________________________________________

_________________________________________________________________________________________

9.1. Accounting Practice Sets - Banking Statements 16

Unit 9: Accounting Practice Sets

Photo Credit
Check Writing by David Goehring is licensed under CC BY 2.0 via Flickr.

Bibliography
Weygandt, Jerry, Paul Kimmel, and Donald Kieso. Accounting Principles. Danvers: John Wiley
& Sons, Inc., 2009.

Valix, Conrado, Jose Peralta, and Christian Aris Valix. Intermediate Accounting Volume 1.
Manila: GIC Enterprises & Co., Inc., 2019.

Corporate Finance Institute. “Deposit Slip.” CFI. Last modified March 9, 2021.
https://corporatefinanceinstitute.com/resources/knowledge/finance/deposit-slip/

9.1. Accounting Practice Sets - Banking Statements 17