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week 7 notes

by: Taylor Knecht

week 7 notes ACTG 201-04

Taylor Knecht

ACTG 201 Intro to Financial Accounting
Loretta Backstrom

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ACTG 201 Intro to Financial Accounting
Loretta Backstrom
Class Notes
week 7 notes accounting 201 loretta backstrom montana state university
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This 0 page Class Notes was uploaded by Taylor Knecht on Monday November 2, 2015. The Class Notes belongs to ACTG 201-04 at Montana State University - Bozeman taught by Loretta Backstrom in Summer 2015. Since its upload, it has received 18 views. For similar materials see ACTG 201 Intro to Financial Accounting in Business at Montana State University - Bozeman.


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Date Created: 11/02/15
Week 7 The person with the primary responsibility for reconciling the bank account and making deposits is also the company39s accountant vioates control activity of segregating duties recordkeeping must be separate from physical custodies too much opportunities for embezzlement Cash receipt controls estabishment of responsibility ony designated personel handle cash physica controls cash registers safes limit access to cash independent internal veri cation the review of data prepared by employees Human resource control Mail receipt mai can only be opened my mail clerks list of mail prepared and all checks marked quotdeposit onlyquot each mai clerk signs ist ist sent to cashiers department sent to accounting departments cash disbursement controls internal control over cash disbursements is more effective when companies pay by check or electronic fund transfers EFT rather than cash one exception payments for incidental amounts by petty cash petty cash fund 1 establish fund 2 make payments from fund 3 replenish fund Petty cash Establish Petty cash 100 Cash 100 Payments don39t touch petty cash Replenish Postage expense 44 Freight out 38 Misc 5 Cash 87 Concept receipts equate to spent money petty cash is a way to set accounts without continuously recording small money transfers for expenses Cash over and short extra or missing money in petty cash Contra features or bank account use of bank contributes to good internal control over cash minimizes currency on hand doube recorded funds reconciiation Debt memorandum bank service charges not sufficient funds Credit memorandum correct notes receivable interest earned Reconciliation of items Deposits in transit Outstanding checks Bank memorandum Errors All time ags PWF Amounts due from individualscompanies expected to be collected amount owed by customers for saleservice account receivable written promise for amount receivable collection of interest promissory note note payable nontraditiona receivable interest of cer loans advances income taxes other receivables BS Current assets Cash AR note receivables other receivables intercompany receivables Types 3 issues recognize accounts receivable vauing accounts receivables disposing accounts receivables Recognizing service organization records receivables when service is performed on account merchandizer records account receivable at point of sale on account Valuing current asset vauation realizable value Uncollected account receivable saes on account raise possibility of not being collected companies record credit losses as debits to bad debt expense or uncollectable accounts expense determine uncollectible percentage based on industry averages Allowance for doubtful account AFDA contra asset account give room for accounts that will not be paid reduces realizable value on balance sheet AR AFDA Cash realizable value uncollectable only changes from year to year Bad debt accounts not accepted by the GAAP Methods for documenting uncollectable accounts Direct write off theoretically undesirable no matching recievable not states at cash realizable value not accepted for nancial reporting Allowance for doubtful accounts losses estimated better matching receivable stated at cash realizable value required by GAAP Allowance method 1 Companies estimate uncollectible accounts receivable 2 Debit bad debt accounts and credit allowance for doubtful accounts as contra asset Estimating the allowance Percentage of sales Matching Sales ltgt bad debt expense emphasize income statement relationship based on past expense determining factor Percentage of receivables Cash realizable value Accounts receivables ltgt AFDA baance sheet relationship AR aging accounts are more likely to be bad debt the longer they are unpaid


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