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Summary_week9 - Summary Chapter 8 and 9 Internal control...

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Summary Chapter 8 and 9 Internal control Cash management Reconcile Bank statement Credit sales and notes receivable Estimate Bad Debt Expenses
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7 PRINCIPLES OF INTERNAL CONTROL Internal control principles common to all companies: 1. Establish responsibilities. 2. Divide responsibility for related transactions. 1. Maintain adequate records. 2. Insure assets and bond key employees. 3. Separate recordkeeping from custody of assets. 1. Apply technological controls. 2. Perform regular and independent reviews. C 1
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LIMITATIONS OF INTERNAL CONTROL Human Error Negligence Fatigue Misjudgment Confusion Human Fraud Intent to defeat internal controls for personal gain C 1 Cost and Benefit The costs of internal controls must not exceed their benefits.
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CASH, CASH EQUIVALENTS, AND LIQUIDITY ASSET Cash Currency, coins and amounts on deposit in bank accounts, checking accounts, and some savings accounts. Also includes customer checks, cashier checks, certified checks, and money orders. Cash Equivalents Short-term, highly liquid investments that are: 1. Readily convertible to a known cash amount. 2. Close to maturity date and not sensitive to interest rate changes. C 2 Liquidity Assets An asset that can be readily converted into another type of asset or be used to satisfy an obligation.
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CASH MANAGEMENT 2 goals of cash management : 1. Plan cash receipts to meet cash payments when due. 2.
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This note was uploaded on 05/04/2011 for the course STAT 1302 taught by Professor Smslee during the Spring '10 term at HKU.

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Summary_week9 - Summary Chapter 8 and 9 Internal control...

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