LEGL-180 Chapter Notes - Chapter 11: Bank Reconciliation, Bank Statement, Ecliptica
Document Summary
Internal control: organizational plan and procedures that managers use to control a business"s operations and assets. Appropriate and accurate accounting records are generated. Most bookkeeping transactions involve cash (receipt of cash, payment of cash, operating expenses, purchases) Large amounts of cash can be a source of temptation to employees, therefore certain controls need to be in place to ensure safe keeping. Owner/operator might be responsible for handling of all cash receipts (actual acceptance of the cash or cheque) Controls for cash receipts are: supported with back up documentation, accountability procedures control the transfer of cash and the custody of cash from one person to another, cash receipts are deposited promptly, tasks/responsibility are divided. All receipts should be banked promptly (daily, twice daily . ) As means of safeguarding cheques, they are endorsed. Most businesses use a restrictive endorsement for deposit only which prevents it form being cashed or transferred to someone else.