Chapter_7_Notes

Chapter_7_Notes - Chapter 7 Objectives 1. Identify the...

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Chapter 7 Objectives 1. Identify the principles of Internal Control . 2. Explain the application of Internal Control to cash receipts and disbursements . 3. Prepare a Bank Reconciliation . 4. Explain the Reporting of cash. 5. Discuss the basic principles of Cash Management . 6. Identify the elements of a Cash Budget . 7. Interpret measures that evaluate the Adequacy of Cash .
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What is Cash? Currency and coins Checks and Money Orders Amounts on Deposit Traveler’s Checks Credit Card Deposits Anything a bank will take for deposit .
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Internal Control All the related methods and measures adopted within a business to Safeguard its assets Enhance the accuracy and reliability of its accounting records. Cash is the most desirable asset because it is readily convertible into any other asset. Therefore, proper internal controls must be established.
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Internal Control 1. Establish Responsibilities Signing Checks Opening mail Making deposits Using Cash Register 2. Segregation of Duties Custodial function should be separate from the Accounting function . For example, the cashier should never also be a person in the accounting department or have access to the books and records of the company. 3. Documentation Should always use pre-numbered invoices and shipping documents. Source documents must be promptly forwarded to the record keeping department. Every expenditure must be verified.
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Must keep a control listing of all cash receipts . 4.
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This note was uploaded on 04/18/2008 for the course BUS 210 taught by Professor Schmeltz during the Spring '08 term at SUNY Stony Brook.

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Chapter_7_Notes - Chapter 7 Objectives 1. Identify the...

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