Principles of ACCT I
Principles of ACCT I ACCT 2121
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This 2 page Class Notes was uploaded by Deshawn Leannon on Sunday October 25, 2015. The Class Notes belongs to ACCT 2121 at University of North Carolina - Charlotte taught by Sarah Yarbrough in Fall. Since its upload, it has received 34 views. For similar materials see /class/229029/acct-2121-university-of-north-carolina-charlotte in Accounting at University of North Carolina - Charlotte.
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Date Created: 10/25/15
Internal Control Cash and Bank Reconciliation Internal Control All companies include as part oftheir operating activities a variety of procedures and policies th at are referred to as internal controls Controlling and Reporting Cash Internal control of cash is important to any organization Voume of cash is enormous Cash is valuable and quotownedquot by person possessing it Reporting Cash and Cash Equivalents Cash includes money or any instrument that banks will accept for deposit and immediate credit to a company s account such as a check money order or bank draft are short term highly liquid investments purchased wit hin three months of maturity Bank Procedures and Reconciliation Banks provide services that help businesses to control cash in several ways Restricting Access Documenting Procedures ndependently Verifying A bank reconciliation is an internal report prepared to verify the accuracy of both the bank stat ement and the cash accounts ofa business or individual Bank Statement Reconciling Differences Your bank may not know about 1Errors made by the bank 2Time lags aDeposits that you made recently bChecks that you wrote recently You may not know about 3 Interest the bank has put into your account 4Eectronic funds transfer EFT 5Service Charges taken out of your account 6Customer checks you deposited but that bounced 7 Errors made by you Bank Reconciliation To determine the appropriate cash balance these balances need to be reconciled Balance per bank 1Baance per bank statement 2ADD Deposits in Transit 3SUBTRACT Outstanding Checks 4 bank errors Balance per books 1Baance in cash account 2ADD anterest Earned b EFT received from customer 3SUBTRACT a NSF Check b Bank Service Charge 4 company errors Journal entries are required for reconciling items not yet recorded in the Interest Received Dr Cash A 20 Cr interest Revenue R SE 20 EFT Received from Customer Dr Cash A 100 Cr Accounts Receivable A 100 NSF Check Dr Accounts Receivable A 18 Cr Cash A 18 Service Charges Dr Office Expenses E SE 6 Cr Cash A 6 Company Error Dr Accounts Payable L 9 Cr cash A 9