Bank Reconciliations, & Cash Internal Controls-Presentations

Explore how internal controls safeguard assets, ensure reliable accounting records, and improve efficiency, with practical principles like establishing responsibility, separation of duties, and technology-enabled reviews.

Learn to separate cash-handling from recordkeeping, deposit cash receipts daily, and control disbursements with checks or electronic funds transfers to preserve an audit trail and cash flow.

Explore cash receipts internal controls and a voucher-based payment system, emphasizing owner oversight, check signing, audit trails, separation of duties, and bank reconciliations in purchasing and recording.

Explore cash disbursements internal controls and voucher system for payments, highlighting owner oversight, check signing, and bank reconciliations in small firms, with purchasing separation of duties in larger organizations.

Learn how to perform a bank reconciliation by comparing the bank statement to the books, identify timing differences, and record adjustments to cash, deposits, checks, and bank charges.

Learn how to set up and manage a petty cash fund, record its initial investment, replenish after expenditures, and handle cash over/short with reconciliations to maintain proper internal controls.

Define bank reconciliation as a report that explains the difference between the book cash balance and the bank statement, guiding adjustments for outstanding items and bank charges.

Defines a bank statement as a bank document showing beginning balance, deposits, withdrawals, and ending balance, and explains its use in monthly bank reconciliations against the general ledger.

Define canceled checks as checks the bank has paid and deducted from the depositor's account, contrast them with outstanding checks, and explain their role in bank reconciliation.

Define cash according to fundamental accounting principles, including currency, coins, and bank deposits in checking or savings, and compare cash to cash equivalents on financial statements.

Cash equivalents are short-term, highly liquid investments readily convertible to a known cash amount and near maturity, typically within 90 days, with market value not sensitive to interest rate changes.

Define cash over and short as the income statement account recording cash overages and shortages from errors in receipts or payments, and use debits and credits to balance the difference.

Define a check as a document signed by a depositor instructing the bank to pay an amount to a recipient, with features like pre-numbered checks, date, payee, amount, and endorsement.

Define the check register as a cash disbursement journal with check numbers, dates, payees, descriptions, and amounts, showing how outflows affect accounts and roll up to the general ledger.

Define deposits in transit as deposits recorded by the company but not yet recorded by the bank, and explain how they create timing differences in bank reconciliations.

Define the gross method as recording purchases at full invoice price, without upfront discount. If paid within discount terms, account for the discount at payment and reduce inventory.

define and illustrate an invoice as an itemized record of goods or services, listing date, invoice number, customer name, terms, rates, and total due, with related journal entries.

Define liquidity as the availability of resources to meet short-term cash requirements, and assess it with the current ratio (current assets to current liabilities) and the quick ratio.

Define liquidity as the availability of resources to meet short-term cash needs. Apply the current ratio and quick ratio, using quick assets and excluding inventory.

Identify outstanding checks as checks written and recorded by the depositor but not yet paid by the bank, illustrating timing differences addressed in the bank reconciliation.

Define petty cash as a small on-hand fund for minor expenses, kept at a fixed amount (such as $250) and replenished from checking with receipts and an over/short adjustment.

Define a purchase order as the purchasing department's document to initiate an order with a vendor, with no journal entry until goods arrive and inventory and accounts payable are recorded.

Define a purchase requisition as a department's document listing needed merchandise and requesting purchase, then it flows to purchasing to create a purchase order for the vendor, supporting internal controls.

Define vendee according to fundamental accounting principles as the purchaser of goods or services, and explain how to identify the buyer versus the seller (vendor) in transactions and problems.

Define vendor as the seller of goods or services and explain which side of a transaction applies. Distinguish vendor, seller, and purchaser terms used in problems.