Internal Cash Control

Internal Cash Control - Running Head: INTERNAL CASH CONTROL...

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Running Head: INTERNAL CASH CONTROL 1 Internal Cash Control Sarah Jones ACC/220 4-23-2010 Robert Neely
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INTERNAL CASH CONTROL 2 This paper will discuss the answers to the questions presented at the end of scenarios E4- 5, P4-1A, and P4-2A supplied by chapter 4 pages 194 and 197 of the text book. These questions will focus on problems and solutions to internal control over cash disbursements. This paper will also be explaining how a company might use the five basic principles of cash management to increase accuracy. Scenario E4-5 discusses Idaho Company’s internal control over cash disbursements. The weaknesses in the company’s internal control over cash disbursements are the company doesn’t use prenumbered checks, checks are kept in and unlocked cabinet, and the company doesn’t have a designated person or department to audit records kept on checks written. Not using prenumbered checks makes it difficult to track if a check wasn’t recorded. The checks could easily be stolen from the unlocked cabinet and used without authorization. The treasurer is authorized to write checks and handle recordkeeping. There is less room for error when an outside, non associated person or department does the recordkeeping. At the end of this paper is a sample memo that could be submitted with recommendations on how to fix these weaknesses. Scenario P4-1A discusses the internal control principles of the Guard Dog Company. The company prenumbers its checks and requires that all checks be prepared through the company’s check writing program. This helps the company track all checks written and prevents any errors in spelling and misreading of difficult handwriting. The company has implemented
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Internal Cash Control - Running Head: INTERNAL CASH CONTROL...

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