Chapter 6 Flashcards
What are the principles of Internal control?
Maintain adequate records.
Divide responsibility for related transactions.
Perform regular and independent reviews.
Establish responsibilities.
What is the purpose of internal controls?
To help managers know if the business is receiving the assets and services it has paid for.
Bonding employees who handle cash is important because it:
reduces risk of theft
Identify the principles of internal control
Insure assets.
Separate recordkeeping from custody of assets.
Perform regular and independent reviews.
Maintain adequate records.
Apply technological controls.
Establish responsibilities.
Blockchain
Technology used to create a secure ledger of transactions.
blockchain is continuously and simultaneously updated and verified
blockchain makes it more difficult for the ledger to be modified without a detailed record of changes
explains why liquid assets are needed in a business?
Liquid assets must be available to pay current liabilities.
types of technological impacts related to internal control:
more extensive testing of records
separation of duties
new evidence of processing
reduced processing errors
What are goals of good cash management.
Keep a minimum level of cash necessary to operate.
Plan cash receipts to meet cash payments when due.
describe the Cash Over and Short account?
It is an income statement account.
It records the effects of cash overages and cash shortages.
A debit balance reflects an expense.
describe the goals and principles of cash management?
Plan cash receipts to meet cash payments when due.
Keep a minimum level of cash necessary to operate.
Money should be spent only when it is available.
Encourage quick collection of receivables.
describes a petty cash receipt
The petty cashier must present all paid receipts to the company cashier in order to replenish the fund.
A petty cash receipt is sometimes called a petty cash ticket.
A petty cash receipt will have a signature line for the person receiving a payment from the fund.
Any person wishing to withdraw funds from a petty cash fund must complete a petty cash receipt.
The petty Cash fund is debited or credited by
When the account is reduced
When the account is increased
When the account is created
To solve petty cash/cash quiz problems
Petty Cash is debited when the fund is initially established and when it is increased.
Petty Cash is credited when the fund is decreased.
Cash is credited when the account is replenished.
The expenses are debited when the fund is replenished.
Electronic funds transfer (EFT)
Use of electronic communication to transfer cash from one party to another.
Deposit ticket
Lists currency, coins and checks deposited into an account
