Chapter 9 - College Accounting: A Practical Approach Flashcards
What is internal control?
Methods to control assets and monitor operations
What does internal control prevent?
Avoidable loss
How many objectives are there to internal control?
3
What are the three objectives of internal control?
- Assets are safeguarded and used for business
- Business info is accurate
- Compliance
How many general principles of internal control are there?
7
What does a signature card do?
Verify the authenticity of the signature on a cheque
What is endorsement?
Signing by depositing party
Who is the drawer?
The person writing the cheque
Who is the drawee?
The bank transfer funds
Who is the payee?
The person receiving the funds or being paid
What are cancelled cheques?
Cheques processed by the bank and non-negotiable
What is the purpose of a bank reconciliation?
Prove accuracy of company and bank records
What are deposits in transit?
Deposits not yet recorded by the bank
What are outstanding cheques?
Cheques that are written but have not yet cleared the bank
What is petty cash?
Funds used to pay small day to day expenses
What type of account is petty cash?
Asset
What report does petty cash fall on?
Balance sheet
What is a custodian in regards to petty cash?
The person designated to control petty cash
Does the petty cash account get regularlily effected by journal entries?
NO
What type of slip is used with petty cash to record transactions in the funds?
Petty cash voucher
What two signatures are on the petty cash voucher?
Person giving the money out and person using the money
What is a tool used that is like a worksheet for petty cash?
Auxiliary Petty Cash Record
What is a change fund?
Cash used to make change for customers paying in cash
What is another name for change fund?
Float
Does the float change day to day?
NO
What type of account is the change fund?
Asset
What report can you find the change fund on?
Balance Sheet
What is the account used to record small errors in giving change?
Cash over and shorts
What type of account is the cash over and shorts?
Expense furthermore miscellaneous expense
What report would you find the over and short account on?
Income Statement
What account do over and shorts effect on the cash side?
Other income
When is over and short a revenue?
When there is a credit balance
