B sufficiently close to their maturity date so that

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Accounting
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Chapter 6 / Exercise EX6-33
Accounting
Reeve/Warren
Expert Verified
b. Sufficiently close to their maturity date so that market value is not sensitive to interest rate changes. B. Control of Cash Receipts 1. Over-the-counter cash receipts: a. Record on a cash register at time of sale. b. Separate custody from recordkeeping. 3. Cash receipts by mail: a. Two people open mail and prepare list of cash received; copies to cashier, recordkeeper in accounting area, and clerks who open mail. b. Cashier deposits. c. Recordkeeper records. 14
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Accounting
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Chapter 6 / Exercise EX6-33
Accounting
Reeve/Warren
Expert Verified
ACCT201 Final Study Guide d. Bank account reconciled by another person. C. Control of Cash Disbursements To safeguard against theft—require all expenditures be made by check (except for small payments made from petty cash fund) and deny access to the accounting records to anyone, other than the owner, who has authority to sign checks. 1. A voucher system is a set of procedures and approvals designed to control cash disbursements and the acceptance of obligations. The voucher system includes procedures for: a. Verifying, approving, and recording obligations for eventual cash disbursements. b. Issuing checks for payment of verified, approved, and recorded obligations. c. Key factors in a voucher system: i. Only approved departments and individuals are authorized to incur such obligations. ii. Several business documents (purchase requisition, purchase order, invoice, receiving report, and check) are accumulated in a voucher , which is an internal document (or file) used to accumulate information to control cash disbursements. 2. Use a petty cash system of control as follows: a. Write and cash a check to establish petty cash fund. Entry to record establishment: debit Petty Cash, credit Cash. b. Assign a petty cashier (custodian) to account for the amounts expended and keep receipts. c. Entry to record reimbursement: debit the related expense and/or asset accounts for the amounts paid for with petty cash, credit Cash for the amount reimbursed to the petty cash fund. d. Sometimes, the petty cash payments report plus the cash remaining will not total to the fund balance. i. A shortage is recorded as an expense in the reimbursing entry with a debit to the Cash Over and Short account. ii. An overage is recorded with a credit to the Cash Over and Short account in the reimbursing entry. III. Banking Activities as Controls A. Basic Bank Services Bank accounts permit depositing money for safeguarding and help control withdrawals. 1. A bank account is a record set up by a bank for a customer. To limit access, all persons authorized to write checks, documents instructing the bank to pay a specified amount of money to a designated recipient, sign a signature card . Each bank deposit is supported by a deposit ticket . 2. Electronic Funds Transfer (EFT) is the electronic communication transfer of cash from one party to another.

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