Study Guide for Exam Three

Study Guide for Exam Three - Study Guide for Exam Three...

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Study Guide for Exam Three CHAPTERS 7-9 Objectives and application of internal control principles Internal Control All the related methods and measures adopted within a business to safeguard its assets from employee theft, robbery, unauthorized use, and to enhance the accuracy and reliability of its accounting records by reducing the risk of errors and irregularities in the accounting process. Objectives of internal control principles Safeguard assets Enhance accounting reliability and accuracy Application of internal control principles Cash Receipts o Designate one person to handle cash (est. of responsibility) o Assign duties of receiving cash and recording cash and having custody of cash to different individuals (segregation of duties) o Obtain remittance advices for mail receipts, cash register tapes for over the counter receipts, and deposit slips for bank deposits (documentation procedures) o Use company safes and bank vaults to store cash with access limited to authorized personnel and using cash registers in executing over the counter receipts (physical, mechanical, and electronic controls) o Making independent daily counts of register receipts and daily comparisons of total receipts with total deposits (independent internal verification) o Bonding personnel who handle cash and requiring them to take vacations (other controls) Cash Disbursements o Having only specified individuals (treasurer) authorized to sign checks (est. of Responsibility) o Assigning duties of approving items for payment, paying the items, and recording the payment to different individuals (segregation of duties)
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Study Guide for Exam Three - Study Guide for Exam Three...

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