Ch 7 Appendix And IFRS Insights Flashcards
Collection float
Difference btw amount on deposit according to company’s
Records and amount of collected cash according to
bank record
Internal control
Used to safeguard cash and ensure accuracy of
accounting records
Lock box accounts, advantages?
Company rents local post office box and authorizes
Local bank to pick up remittances mailed to that
Box number and credit to company’s acct of collections
Accelerates availability of cash and improves internal
Control of cash
General checking account
Principal back account of most companies
Company cycles all transactions through it
Imprest bank accounts, example of use?
Account acts as clearing account for large volume of checks
Or for specific type of check
Makes a specific amount of cash available for limited purpose
Example. Used for petty cash disbursement
Cash Over and Short
Used when petty cash fund. Fails to prove out
Cash proves out short
Sum of receipts and cash in fund is less than Imprest amount
5 reconciling items
1 Deposits in transit 2 outstanding checks 3 bank charges 4 bank credits 5 bank or depositor errors
Deposits in transit
End of month deposits of cash recorded on depositor’s
Books in 1 month are received and recorded by bank in
Following month
Outstanding checks
Checks written by depositor are recorded when written
But may not be recorded by bank til next month
Bank charges, 4 examples
Charges Recorded by bank against depositor’s balance
for items:
Bank services, printing checks, not sufficient funds,
safe deposit box
Bank credits, 2 examples?
Collections or deposits by bank for benefit of depositor
Ex. Note collection, interest earned
Bank or depositor errors
Errors on either part of the bank or depositor that cause
Bank balance to disagree with depositors book balance
Bank reconciliation
Schedule explaining any differences btw bank’s
And company’s records of cash
2 sections of reconciliation
Balance per bank statement
Balance per depositor’s books
