Chapter 6

Front 1

Policies and procedures managers use to . . .

Back 1

•Protect assets.
• Ensure reliable
accounting.
• Promote efficient
operations.
•Urge adherence to
company policies.

Front 2

Control of Cash Receipts: Over the Counter Receipts

Back 2

• Clerk who has access to cash in the register should not have access to its locked-in record. Clerk should count cash in register, record the amount and then turn over the cash and a record of amount to company cashier at end of work day
• Company cashier has access to cash but not accounting records, turn over to supervisor, who has access to records of cash but not cash

Front 3

Control of Cash Receipts: Cash by mail

Back 3

•Cash Receipts by Mail: two people open mail-> person opens list of money received -> first copy sent to cashier and another to record keeper in accounting, a third by clerk who opened mail -> cashier takes money to bank, record keeper puts it on accounting records

Front 4

Cash Over and Short account:

Back 4

when there is a difference between the cash in the cash register and the record of cash receipts (maybe due to too little or too much change given). An income statement account recording the incomes effect of cash overages and shortages. Can be both expense and revenue, usually expense

Front 5

Voucher System:

Back 5

A set of procedures and approvals designed to control cash disbursements and the acceptance of obligations. The voucher system of control establishes procedures for
•Verifying, approving and recording obligation for eventual cash disbursement
•Issuing checks for payment of verified, approved and record obligations

Front 6

Petty Cash:

Back 6

Small payments required in most companies for items such as postage, courier fees, repairs and supplies

Front 7

Petty Cash: reimbursement

Back 7

They are usually reimburse at the end of each accounting period (even if cash if not low) or is low.
Not reimbursing at the end of an accounting period means: financial statements would show both an overstated cash asset and understated expenses (or assets) that were paid out of petty cash

Front 8

Bank Reconciliation: Bank Statement Balance

Back 8

Deduct: Outstanding checks.
Add: Deposits in transit.
Add or Deduct: Bank errors

Front 9

Bank Reconciliation: Book Balance

Back 9

Deduct: Nonsufficient funds check (NSF).
Deduct: Bank service charge.
Add: Interest earned on checking account.
Add: Collections made by the bank.
Add or Deduct:
Book errors.