chapter 6 slides

Question 1

litigation

Answer 1

attorneys hiring accountants

Question 2

internal contols do what

Answer 2

-prevent theft and embezzlement
-ensure accurate information

Question 3

what are the basics of internal controls

Answer 3

SAPID
S-segregation of duties
A-authorization of transactions
P-protection of assets
I-independent checks and reconciliations
D-documentation

Question 4

what is it important to never let accountants have control of

Answer 4

CASH

Question 5

what does segregation of duties prevent

Answer 5

reduced opportunities for any one person to perpetuate and conceal a fraud

Question 6

how do people prevent mistakes with segreation of duties

Answer 6

double-check each other’s work

Question 7

what does authorization of transactions reduce

Answer 7

reduces the chance for non-responsible people to misappropriate bsuiness property

Question 7

what does authorization of transactions establish

Answer 7

clear lines of responsibility

Question 7

examples of duties that you seperate

Answer 7

-authorizing transacations (spedning decisions
-recording transactions (bookkeeping)
-custody f assets (check signer and receiving supplies)

Question 8

what does protection of assets prevent

Answer 8

prevents circumvention of other internal controls and physical theft and harm

Question 9

examples of protection of assets

Answer 9

-keep easily stolen assets locked up
-keep passwords
-protect against vandalism

Question 10

what does independent checks and reconilation provide

Answer 10

a safety check to make sure the system is working properly

Question 11

what does independent checks and reconilation compare

Answer 11

compare budgeted expenses and income to actual expenses and income
-compare physical assets with accounting records of assets

Question 12

what does independent checks and reconilation balance

Answer 12

balance the checkbook at least once a month

Question 13

what does independent checks and reconilation allow

Answer 13

allows independent auditors to examine the business financial system

Question 14

purpose of documenation

Answer 14

provides a written record for every transaction

Question 15

reason for documentation

Answer 15

-prevent fraud
-1 yr later, with no transaction, if someone ask why you did something, you wont just remember

Question 16

what does documentation require

Answer 16

requires a receipt, authorization form, invoice, cancelled check or other written documentation for every transaction

Question 17

when reconciling a bank accounr what do you look for

Answer 17

does the actual cash in the bank match what is on balance sheet?

Question 18

what are you trying to find when reconciling bank account

Answer 18

errors, omissions, mistakes