Week 8 Preparation Questions Solutions

Week 8 Preparation Questions Solutions - ACCT1501 2011S1...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ACCT1501 2011S1 Week 8 Preparation Questions Solutions Preparation Questions: Discussion Question 7.2, 7.6, 7.8, 7.9, 7.11; Problem 7.5, 7.11; Additional Question 3 2. The main components of internal control are: i Run the enterprise competently ii Establish clear lines of responsibility iii Maintain effective records iv Separate record-keeping from handling assets v Adequately pay and motivate employees vi Carry insurance on assets vii Physically protect sensitive assets. 6. Internal controls over cash i Payments should only be made for properly authorised documentation. ii Cheques should be signed by two staff members who are independent of invoice approval and accounting duties. iii Original invoices should be stamped ‘paid’ to ensure they are not subsequently represented for payment. iv Mail openers should not also have duties related to the cashiers or record-keeping. 8. The purpose of the bank reconciliation statement is to explain any differences between the bank balance at the end of the period as shown in the bank statement and in the firm’s ledger, respectively. Any errors discovered may be rectified before completing the journals and postings for the period. 9. If a company is owed $100,000 by the bank it would appear as a DR in the company’s ledger accounts because it is an asset of the company and assets are recorded as debits. From the bank’s point of view the amount is a liability that is recorded as a credit (CR). 11. A petty cash system acts as an internal control by the maintenance of the original fund advanced to the petty cashier at its initial amount. The exact amount of disbursements made from the fund is reimbursed periodically by drawing a cheque for the required amount. The amount of the original fund is debited to an asset account, Petty Cash. Amounts subsequently reimbursed are debited to the appropriate expense accounts. The petty cashier is at all times accountable for the full amount. Requests for reimbursement are supported by appropriate vouchers and a balanced petty cash record. These are checked by a responsible person prior to reimbursement. Problem 7.5
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

Week 8 Preparation Questions Solutions - ACCT1501 2011S1...

This preview shows document pages 1 - 2. Sign up to view the full document.

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