CHAPTER 8 Flashcards

Authorising & making payments

1
Q

Controls over payment

A
  • Documentation
  • Authorisation of the expenditure of item
  • Authorised signature for cheques & payment instructions to bank
  • Secure controls over electronic payments
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2
Q

Authorisation of payment

A
  • Which individual can authorise
  • Maximum amount they can authorise
  • when authorising, put signature or initials
  • no signature/initials = payment refused
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3
Q

Cheque requisition form

A

When primary documentation such as an invoice has not been received

  • A form requesting that a cheque should be drawn
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4
Q

Expense claim form

A

Employees want to claim back the money from their organisations after making payments using their own money for items of business expense

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5
Q

Payment method : Cash

A
  • Small payments
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6
Q

Payment method : Cheque

A
  • One-off transaction
  • Not appropriate for monthly deductions
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7
Q

Payment method : Automated payments (BACS)

A
  • Salaries & wages
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8
Q

Signatures on business cheque

A
  • Names & Signature of the person sign the cheque must be :
    → supplied to the bank
    → on a Bank Mandate Form
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9
Q

Crossed cheque

A

Two lines drawn across and “A/C Payee” printed between the lines
⦿ can only be paid into the account whose name appears on the cheque
⦿ can’t be cashed

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10
Q

Cheque sent to payee with remittance advice or??

A

Covering letter

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11
Q

Stopping cheque

A

1) Telephone bank
2) Written instruction

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12
Q

Bank giro credits

A
  • Credit transfer
  • Usually received from customer
  • Can also for electricity, telephone and water companies bill

1) Fill in bank giro credit transfer from
2) Handing the form together with payment (cash/cheque) at bank

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13
Q

Who use bank giro credits?

A

Suppliers like :

  • Telephone companies
  • Water companies
  • Electricity companies
  • Small companies pay wages
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14
Q

Banker’s draft

A
  • Cannot be stopped/cancelled
  • Large payments involved
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15
Q

Standing order

A
  • Paying business set up the arrangement
  • Regular payments
  • Fixed amount
  • Standing order mandate
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16
Q

Direct debit

A
  • Person RECEIVING the payment initiates each payment
  • Regular payment
  • Variable/fixed amount
  • Telephone/gas/electricity/water bills
  • company being paid will inform payer of amount & date each payment
  • Direct Debit Instruction

1) Paying company fill in
2) Sent to supplier
3) Supplier sent to bank

17
Q

Explanatory document to go with payments

A
  • Remittance advice
  • Order form (payment sent with order)
  • Pro-forma invoice (payment with order,, sale/return transaction)
  • Bank giro credit form
  • Covering letter (when other documents takde)
18
Q

There might be 2 remittance advices ?

A

Yes.

1st : Sent with supplier statement

2nd : Prepared by customer’s account department –> sent to supplier with payments