ACTG 2010 Chapter Notes - Chapter 6: Deferral, Subledger, Current Liability

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30 Jan 2018
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Actg 2010 - chapter 6 cash and accounts receivables notes. Cash and accounts receivables are the most liquid assets. Uncollectible accounts (also known as doubtful accounts or bad debts) will never be collected. Liquidity: ability for a company to meet their short-term obligations. Internal controls are continually monitored and used to safeguard assets. The key elements of an effective internal control system include: 1. Assignment of responsibilities: o(cid:374)e perso(cid:374) o(cid:374) a (cid:272)ash register, so if (cid:373)o(cid:374)ey is (cid:373)issi(cid:374)g, you"ll k(cid:374)o(cid:449) (cid:449)ho did it, 3. Separation of duties: ensuring employees cannot authorize transactions, record them and have custody of the asset, collusion: when two or more employees worth together to commit fraud, and conceal it, 4. Independent verification: one person checking the work of another, manager double check cash count of cashiers, 5. Documentation: creating an audit trail by which transactions can be traced back to source documents.

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