Chapter 06

Chapter 06 - Chapter6 Cashand Internal Control Cash Coin...

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Chapter 6 Cash and  Internal  Control
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Cash Coin and currency Checking, savings, and money market accounts Undeposited, cashier, and certified checks LO1
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Cash Equivalents Commercial paper U.S. Treasury bills Certain money market funds Readily convertible to cash Original maturity to investor of three months or less Examples:
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Cash Management Necessary to ensure company has neither too little nor too much cash on hand Tools Cash flows statement Bank reconciliations Petty cash funds LO2
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Cash balance, beginning of period + = Cash balance, end of period Bank Statements +Deposits +Customer notes and interest collected by bank +Interest earned Canceled checks NSF checks Service charges
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Your Checkbook and your Bank Statement will almost never agree, why???
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Get the hint?
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Bank Reconciliation – Step 1 Deposits in transit: Recent deposits not yet reflected on bank statement Trace deposits listed on the bank statement to the books. Identify the deposits in transit. Add to the bank balance.
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Example of Reconciliation Balance per statement, June 30 $3,308.59 Add: Deposit in transit 642.30 Bank Statement Adjustments: Deposits
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Bank Reconciliation – Step 2 Outstanding checks: Checks written but not yet cleared bank Trace checks cleared by the bank to the books. Identify outstanding checks. Subtract from the bank balance.
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Bank Statement Adjustments: Checks and Deposits Outstanding Balance per statement, June 30 $3,308.59 Add: Deposit in transit
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Chapter 06 - Chapter6 Cashand Internal Control Cash Coin...

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