Accounting Handout 7.1

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  • Topic: Cash, Petty cash, Imprest system
  • Pages : 3 (871 words )
  • Download(s) : 1000
  • Published : August 22, 2010
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Assignment 8.1 Handout 1. Internal controls are designed to safeguard assets, encourage employees to follow company policies, promote operational efficiency, and ensure accurate accounting records. Requirements R1. Which objective is most important? R2. Which must the internal controls accomplish for the business to survive? Give your reason. 2. The Sarbanes-Oxley Act affects public companies. Requirement R1. How does the Sarbanes-Oxley Act relate to internal controls? Be specific. 3. Separation of duties is a key internal control. Requirement R1. Explain in your own words why separation of duties is often described as the cornerstone of internal control for safeguarding assets. Describe what can happen if the same person has custody of an asset and also accounts for the asset. 4. There are 5 characteristics identified in the chapter as pitfalls of e-commerce. Requirement R1. List the 5 characteristics identified in the chapter as pitfalls of e-commerce. 5. Answer the following questions about the controls in bank accounts: Requirements R1. Which bank control protects against forgery? R2. Which bank control reports what the bank did with the customer’s cash each period? R3. Which bank control confirms the amount of money put into the bank? 6. The Cash account of Safe and Secure Security Systems reported a balance of $2,490 at May 31, 2011. There were outstanding checks totaling $500 and a May 31 deposit in transit of $300. The bank statement, which came from Tri Cities Bank, listed the May 31 balance of $3,360. Included in the bank balance was a collection of $680 on account from Ryan Saar, a Safe and Secure customer who pays the bank directly. The bank statement also shows a $20 service charge and $10 of interest revenue that Safe and Secure earned on its bank balance. Requirement R1. Prepare Safe and Secure’s bank reconciliation at May 31. 7. Review your results from preparing Safe and Secure Security Systems’ bank reconciliation in problem #6. Requirement R1....
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