ACCT201 Final Study Guide
Bank account reconciled by another person.
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.
is a set of procedures and approvals designed to control cash
disbursements and the acceptance of obligations. The voucher system includes
Verifying, approving, and recording obligations for eventual cash
Issuing checks for payment of verified, approved, and recorded obligations.
Key factors in a voucher system:
Only approved departments and individuals are authorized to incur such
Several business documents (purchase requisition, purchase order, invoice,
receiving report, and check) are accumulated in a
, which is an
internal document (or file) used to accumulate information to control cash
system of control as follows:
Write and cash a check to establish petty cash fund. Entry to record
establishment: debit Petty Cash, credit Cash.
Assign a petty cashier (custodian) to account for the amounts expended and
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.
Sometimes, the petty cash payments report plus the cash remaining will not
total to the fund balance.
A shortage is recorded as an expense in the reimbursing entry with a debit
to the Cash Over and Short account.
An overage is recorded with a credit to the Cash Over and Short account
in the reimbursing entry.
Banking Activities as Controls
Basic Bank Services
Bank accounts permit depositing money for safeguarding and help control
is a record set up by a bank for a customer. To limit access, all
persons authorized to write
documents instructing the bank to pay a
specified amount of money to a designated recipient, sign a
bank deposit is supported by a
Electronic Funds Transfer (EFT) is the electronic communication transfer of cash
from one party to another.