Chapter 4 Flashcards
A company’s policies and procedures are designed to reduce the opportunity for fraud and to provide reasonable assurance that its objectives will be accomplished.
internal controls
An insurance policy that a company buys to insure itself against loss due to employee dishonesty.
fidelity bond
Manual that sets forth the accounting procedures to be followed.
procedures manual
A document that outlines the chain of command for authority and responsibility.
authority manual
The _____provides guidelines for specific positions such as personnel officer as well as general authority, such as all vice presidents are authorized to spend up to a designated limit.
authority manual
Policies and procedures that apply to designated levels of management, such as the policy that the right to approve overtime pay may apply only to the plant manager.
specific authorizations
Policies and procedures apply across different levels of a company’s management, such as everyone flies coach class.
general authority
Coins, currency, checks, balances in checking and certain savings accounts, money orders, bank drafts, certificates of deposit, and other items that are payable on demand.
cash
Statement issued by a bank (usually monthly) that denotes all activity in the bank account for that period.
bank statement
Memorandum that describes a decrease in the account balance.
bank statement debit memo
Memorandum that describes an increase in the account balance.
bank statement credit memo
Schedule that identifies and explains differences between the cash balance reported by the bank and the cash balance in the firm’s accounting records.
bank reconciliation
Ending cash balance reported by the bank as of the date of the bank statement.
unadjusted bank balance
Actual balance of cash owned by a company at the close of business on the date of the bank statement.
true cash balance
Balance of the Cash account as of the date of the reconciliation before making any adjustments.
unadjusted book balance
