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9 Cards in this Set
- Front
- Back
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Internal Control |
The procedures and strategies used to protect the firm’s assets from theft, damage and misuse. |
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Internal Control Mechanisms |
- Physical Safeguards - Preventative Safeguards - Separation of Duties - Rotation of Duties - Careful Hiring Practices - Effective Employee Training |
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Cash Control |
The procedures and strategies used to protect the firm’s cash. |
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Cash Control Mechanisms |
- All cash transactions should be verifies by a pre-numbered document - All payments should be made by cheque because they are more secure - Payments should not be made directly from the till - Cash in registers should be verifies against the cash register roll - A petty cash system should be used for small payments - Cash should not be kept on t he premises - Cash procedures should be changed periodically - Accurate and up-to-date cash records - A bank reconciliation should be conducted regularly |
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Petty Cash System |
A petty cash system should be used for small payments, so that all payments are verified and authorised. |
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Cheque |
All payments should be made by cheque because they are: - More secure (allowing large payments to be made without the risk of carrying cash) - They can be cancelledif lost or stolen - The eventual recipient of the funds can be traced if necessary. - The cheque butt allows for the recording of the details of the transaction. |
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Bank Reconciliation |
The process of verifying that the entries in a firm’s cash journals are the same as those recorded by the firm’s bank on the bank statement. |
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Bank Reconciliation Statement |
An accounting report which attempts to explain the difference between the bank balance determined in the firm’s records and the bank balance reported on the bank statement. |
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Bank Reconciliation Process |
1. Compare cash receipts 2. Compare cash payments 3. Update the firm’s cash journals 4. Prepare a Bank Reconciliation Statement. |
