《Survey of accounting 2th会计学 Carl S.Warren》ch05.pptVIP

Describe and illustrate the application of internal controls to cash. 3 Learning Objective What is Cash? Cash includes coins, currency (paper money), checks, money orders, and money on deposit that is available for unrestricted withdrawal. Control of Cash Receipts One of the most important controls to protect cash received in over-the-counter sales is the cash register. Control of Cash Receipts After a cash register clerk’s cash has been counted and recorded on a memorandum form, the cash is then placed in a store safe until it can be deposited in the bank. Control of Cash Receipts The employee who opens the mail should initially compare the amount of cash received with the amount shown on the remittance advice. Control of Cash Receipts The employee opening the mail normally also stamps the checks and money orders “For Deposit Only” in the bank account of the business. Control of Cash Receipts When cash is deposited in the bank, the bank cashier normally stamps a duplicate copy of the deposit ticket. This bank receipt is returned to the Accounting Department for comparison and recording. Control of Cash Payments A voucher system is a set of procedures for authorizing and recording liabilities and cash payments. A voucher is any document that serves as proof of authority to pay cash. Describe the nature of a bank account and its use in controlling cash. 4 Learning Objective A summary of all checking account transactions, called a bank statement, is mailed to the depositor each month. It shows the beginning balance, additions, deductions, and the balance at the end of the period. Businesses usually require that all cash receipts be initially deposited in the bank account. Likewise, businesses usually use checks or bank account transfers to make all cash payments. Except very small ones. Describe and illustrate the use of a bank reconciliation in controlling cash. 5 Learning Objective A bank reconciliation is a listing of the items and amounts that cause the cash