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ADMS 2500 Module 6- Cash.docx

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Administrative Studies
Course Code
ADMS 2500
Brian Gaber

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ADMS 2500 Oct.20.2011 Module 6- Cash What is Cash? - categories of cash grouped together: ~ cash in bank account money in the banks ~ cash on hand money that hasn’t been deposited in the bank yet ~ petty cash small amounts of currency used for small disbursements The Bank Account - business must provide board of directors and bank with a copy of authorization on account and how many signatures are required to withdraw funds - bank requires ‘signing officers’ those who are authorized to write cheques by signing a ‘signature card’ Control Over Cash - must control and handle recording of cash - when every movement of cash is recorded and traceable chances of theft are limited - audit trail is the ability to track movements of cash through records - important to list each receipt as soon as it’s received and identify the source of cash - then cash can be co-mingled with other cash (mixed) in the bank account Segregation of Duties and Systems of Authorization - businesses design cash disbursements systems to prevent unauthorized payments Bank and Cash Balances - bank’s recordkeeping can be used to check the record keeping of the business - ending balance on bank statement is usually different from balance on cash account in general ledger, this is because: ~ outstanding cheques ~ deposits not yet credited ~ bank charges ~ credits made by the bank and not yet reflected ~ account errors by bank or depositor Reconciling the Bank - bank reconciliation is a schedule that accounts for all the differences between bank statement balance and company’s book balance - represents the ‘true’ c
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