The American History of Good Things and Nice Stuff
CHAPTER 5 ACCOUNTING NOTESA check has been cleared when funds have been withdrawn from your bank account.Cash receipts responsibilities go down the line by: cashier, supervisor, then accounting team.SOX act provides increased regulations for: internal controls, auditors, and corporate executives Aims to reduce fraud by counteract incentives, reducing opportunities, and encouraging honesty Reduces opportunity by internal control, and stronger oversight by directorsInterest is added to the book balance.Deposits in transit are added to the bank side of the bank reconciliation NSF checks from customers should be deducted from the book balance of the bank reconciliationReconciling items the bank would not know about due to time lags are deposits in transit and outstanding checksOutstanding checks written by the company should be a deduction from the company’s bank reconciliation Segregation of duties is essential for safe guarding assets, makes it to where one person doesn’t control two accounts and can easily steal
Voucher system- approving and documenting all purchases and payments made on accountsFraud triangle- incentive, opportunity, rationalizationA withdrawal from the bank is a debit because a withdrawal decreases its liability from a banks POVBanks provide important controls for a company’s cash, these are: provide documentation, restrict access, independent verificationGood internal control for cash receipts by a supervisor include: completing bank deposits, locking up, comparing cash And for the accounting department: recording cash receipts in journal and comparing cash