Check Stub
Definition
A check stub is a portion of a check that may be perforated and detached from the check itself, retained for convenience and record-keeping purposes. The check stub contains pertinent information regarding the check such as the date, check number, payment amount, payee name, and the account from which the funds are drawn. Both the check and the stub are typically printed with the same check number for easy referencing.
Examples
- Employee Paychecks: When a company issues a paycheck to an employee, the portion kept by the employee detailing gross pay, deductions, and net pay constitutes the check stub.
- Personal Banking: When individuals issue checks from their personal checkbooks, the check stub section is commonly retained in the checkbook to help track issued payments.
- Business Checks: Businesses issue checks to suppliers or service providers and retain the stubs which detail the payment purpose and the amount for proper financial tracking and accounting.
Frequently Asked Questions (FAQ)
Q: What information is typically found on a check stub? A: Check stubs generally include the date, check number, payee’s name, payment amount, and a memo or description of the transaction, allowing for detailed record-keeping.
Q: Why should you keep check stubs? A: Check stubs should be kept for accurate record-keeping, to simplify the reconciliation of bank statements, facilitate tax preparation, and provide evidence of payment in case of disputes.
Q: How long should you keep check stubs? A: It’s generally advised to keep check stubs for at least three years, though for tax purposes, the IRS recommends retaining financial records for up to seven years.
Q: Are digital check stubs acceptable? A: Yes, electronic or digital check stubs are acceptable and often used in modern accounting systems. They provide the same information in a digital format and are easy to store and retrieve.
Q: Can I get a check stub for direct deposits? A: Yes, employees typically receive an electronic version of a check stub with information about their pay and deductions even if the actual payment is made through direct deposit.
Related Terms
- Account Payable: Money that a company owes to its suppliers and service providers, which will often be paid with a physical check or electronic payment retained with a stub for records.
- Bank Reconciliation: The process of comparing accounting records to bank statements, for which check stubs can provide important reference information.
- Payroll: Total amount of money that a company pays its employees, which includes providing paychecks along with stubs containing earnings and deductions.
- Direct Deposit: A digital payment method where money is transferred directly into a receiver’s account, often accompagné by an electronic stub detailing the transaction.
Online References
- Investopedia Check Stub Definition: Investopedia
- Wikipedia Check Stub Article: Wikipedia
Suggested Books for Further Studies
- “Accounting Made Simple: Accounting Explained in 100 Pages or Less” by Mike Piper
- “Financial Accounting For Dummies” by Maire Loughran
- “Payroll and HR: Governmental Oversight and the Payroll Function” by Steven M. Bragg
- “Accounting: The Ultimate Guide to Accounting Principles, Financial Accounting and Management Accounting” by Gregory Becker
Fundamentals of Check Stub: Accounting Basics Quiz
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