Ch 4 accounting

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  1. Section 404
    Requires company management and auditors to document and assess the effectiveness of a company's internal controls
  2. Five key components to an internal control system
    • 1) Control environment
    • 2) Risk assessment
    • 3) Control activities
    • 4) Monitoring
    • 5) Information and communication
  3. Preventative controls
    • 1) separation of duties
    • 2) physical controls
    • 3)┬áproper authorization
    • 4) employee management
  4. Detective controls
    • 1) Reconciliations
    • 2) Performance reviews
  5. Investments that initially mature within three months
    cash equivalent ex. money market funds, treasury bills, certificates of deposit
  6. Checks outstanding
    subtracted from bank balance
  7. deposits outstanding
    added to banks balance
  8. things to reconcile on bank's balance
    Checks outstanding and deposits outstanding
  9. Things to reconcile on company's balance
    intrest, service charge, NSF checks, debit card purchaces
  10. NSF checks
  11. deposits recorded twice by company
  12. intrest earned
  13. bank service fees
  14. Statement of cash flows
    Operating, investing, and financing activities
  15. Operating activities
    transactions and events involving revenues and expenses
  16. Investing activites
    cash investments in long-term assets and invest securities
  17. Financing activities
    transactions designed to finance the business through borrowing or repayment and owner investment
  18. Free cash flow
    net cash flows from operations plus investing cash flows
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Ch 4 accounting

Accounting chapter four internal controls
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