most liquated asset, medium exchange, bank accounts establish practice for safeguarding cash.
signature card, deposit tickets, checks, bank statment, electronic funds transfer, bank reconicilation.
document explaining the reasons for the cash difference between a depositors cash records and the depositors cash balance in its bank account.
bank balance: add deposits in transit, subtract outstanding checks, add or subtract corrections of bank errors.
bok balance: add bank collections, interest revenue, and eft reciepts. subtract service charges, NSF checks, and eft payments. add or subtract corrections of book errors.
pay bills and view bank account electronically. prepare a bank reconicilation any time.
allows a company to:
reconcile to the checkbook online. pay bills online, set up auto payments, promote a paperless approach, electronic notification of bank statements and transactions, secure online delivery of the same.
cash receipts over the counter
receipt is issued for each transaction, cash drawer opens when a transaction is entered, cash register records transaction. register tape sent to accounting department.
cash receipts by mail
mailroom employee opens mail
checks are sent to treasurer and cashier deposits money
remittance advice sent to accounting for journal entries
controller compares records of the days bank deposit and debit to cash made by the accounting department.
controls over payment by check
paying by check is an impartant internal control
check provies a record of payment
the check must be signed and authorized
cash funds on site to pay for small ependitures
designate a custodian of petty cash fund
keep a speicific amount of cash on hand
all payments are supported with a petty cash ticket
cash short or over
new account used whenever a cash fund is short or over may have either a debit or credit balance.
reported as an expense or revenue depending on ending balance.
cash short or over
encourage eomployees to follow company policies
ensure accurate reliable accounting records
proote operational efficiency
sheild of internal control
internal controls help protect against theft, waste, and ineffieicny
Sarbanes-oxley act (SOX)
congress passed sox after the enron and worldcom scandals
provisions: companies must issue an internal control report
public company accounting oversight boardPCAOB to oversee auditors
firms may not both audit and consult accounting services to same comany