Accounting Final Study Guide

Accounting Final Study Guide - Accounting Final Study Guide...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Accounting Final Study Guide Chapter 7 What is fraud: dishonest act by employee benefiting personally at cost to employer. Due to opportunity, rationalization, or financial pressure. What is internal control? All related measures and methods adopted within an organization to safeguard its assets, enhance reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations. 6 Principals of internal control 1) Establishment of responsibility: assign responsibility to specific employees. Requires limiting access only to authorized personnel and identifying those personnel (pass codes to identify who carried out activity). 2) Segregation of duties: different individuals should be responsible for related activities and responsibility for a record-keeping asset should be separate from physical custody of that asset. 3) Documentation Procedures: evidence that transactions and events have occurred (cash register tape). Prenumbering and forwarding documents to accounting department. 4) Physical controls: safeguarding assets and enhance reliability of records. Ex: safes, locks, passkey, time clocks, and monitors, alarms. 5) Independent Internal verification: review of data prepared by employees. Verify periodically or by surprise, employee independent of personnel responsible for action should make verification, discrepancies reported to management. 6) Human resource controls: Bonding employees, rotate duties and require vacations, conduct background checks. Bank Reconciliations : process of comparing bank’s balance with the company’s balance and explaining differences to make them agree. Lack of agreement is due to time lags preventing recording in same period or errors in recording transactions. First record balance per bank statement and balance per books on a schedule. 1) Compare deposits on statement to deposits in transit from previous reconciliation and with deposits per company records. Deposits recorded by depositor but not bank and added to balance per bank. 2) Outstanding checks , issued checks recorded by company but not bank. Deduct from balance per bank. Compare paid shown on bank statement with checks outstanding from previous reconciliation and checks issued by company recorded in the cash payments journal 3) Errors 4) Memoranda : service charge deducted from balance per books or add interest earned. Recording adjusted cash balance per books: collection of note Debit cash and collection fee (miscellaneous expense); credit note receivable and interest revenue
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Book error debit cash credit acct payable. NSF check debit accts receivable credit cash. Service charges debit misc. expense credit cash. Elements of a cash budget:
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 8

Accounting Final Study Guide - Accounting Final Study Guide...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online