Cash and Internal Control
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Fraud Triangle
STRESS
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OPPORTUNITY
PRESSURE
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Separation of Duties
Physical Controls
Proper Authorization
Employee Management
RECONCILATIONS--- Cash, Inventory, A/R, A/P
PERFORMANCE REVIEWS
Recording Transactions
Sound Personnel Policies
BRIEF EXERCISE 4-3 PG 193
EXERCISE 4-4 PG 197
E4-6, 4-7 4-8 PG 197 INTERNAL CONTROL
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Cash on hand
Cash in the Bank
Petty Cash
Cash Equivalents: anything that turns into
cash in 90 days or less : Treasury Bills, 90
day CD
CASH SALES
Cash receipt = checks, cash, debit card
Credit Card = credit card payable not cash
BE 4-4 PG 194 E 4-5 PG 197
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Bank
=
-o/s checks
+Deposit in Transit
Book
+interest
-bank charges
+N/R & interest
-NSF Checks
+EFT
-debit/svc fee
Pg 178 Bank Statement CASH ACT –G/L PG 178
Pg 180 Bank Reconcilation
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Always has a debit (increase) or credit
(decrease) to cash
Cash Increase is revenue or notes receivable
Cash Decrease is expenses, assets or
Accounts receivable
Pg 181
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Do 4-12
Do 4-13
pg 198
pg 198
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Petty means small
JE for Set up and increase
Petty Cash
Cash
JE to Replenish
Expenses
Cash
Ex 4-14, 4-15
Net income that is backed by cash is more likely to
persist into the future than is net income not
backed by cash.
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Operating – Cash inflows, Cash outflows
Investing- investing in yourself and others
Financing – debt and equity (company’s stock)
Direct and Indirect Methods
Direct used by CFE – pg 186 illustration 4-11
Indirect mostly used by corporations
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E4-16 Classifications
E4-17 Net Cash Flows
Pg 199
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P4-2A , P4-3A Bank Reconciliation
P4-5A Cash Acct and Cash Flow Statement