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Explain the necessity for controlling cash In order to sustain current operations and for paying obligations as they come due. 2. Explain the basic requisites of cash control To have a voucher system which is a system to control cash disbursements. Segregation of duties for handling cash and recording cash transactions. Have a periodic reconciliation of bank statement balance and book balance. 3. Explain the procedure for controlling cash receipts through the imprest system. What are the 4 features of an imprest system? All cash receipts are deposited intact to the bank. The 4 features of an imprest system are 4. Explain the necessity of maintaining petty cash fund and detail the Petty Cash Fund operation A petty cash fund is established for a fixed amount and allows a company to effectively control small amounts of cash fairly simply. A responsible employee is designated as petty cashier. A check drawn payable to petty cash is encashed, and the petty cashier places the money in the petty cash fund. As time passes, the petty cashier disburses money from the fund upon authorization of a responsible officer. The petty cashier prepares petty cash vouchers and have it signed by the person receiving cash. 5. Explain the procedure for controlling cash disbursements through the voucher system Under the voucher system a properly approved vouchers, ensuring that all disbursements are authorized, support all cash payments. All potential payments ar recorded first in the voucher register and actual payments are recorded in the check register. 6. List the objectives accomplished by Bank Reconciliation. Which transactions require reconciling? Bank reconciliation explains any difference between a companys book balance of cash and the bank statement balance for the depositor company. All deposits and withdrawals require reconciling. 7. What transactions give rise to Credit Memorandum These are deposits made directly by the bank to the companys account. Typical examples of credit memos are: notes or drafts collected by the bank in favor of the depositor, proceeds of bank loan credited directly to the account of the depositor, and interest earned on the compnays checking account. 8. Define the following 1. Internal Control In accounting and auditing, internal control is defined as a process effected by an organization's structure, work and authority flows, people and management information systems, designed to help the organization accomplish specific goals or objectives.[1] It is a means by which an organization's resources are directed, monitored, and measured. It plays an important role in preventing and detecting fraud and protecting the organization's resources, both physical (e.g., machinery and property) and intangible (e.g., reputation or intellectual property such as trademarks). 2. Imprest system W/c is characterized by daily deposit of all cash receipts intact to the bank and making disbursements through issuance of checks. 3. Petty Cash fund Petty cash is a small amount of discretionary funds in the form of cash used for expenditures where it is not sensible to make any disbursement by cheque, because of the inconvenience and costs of writing, signing and then cashing the cheque. Petty cash is usually stored in a Petty Cash box and kept secure with a key.

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Petty Cash Book is a book of vouchers which are prepared each time a disbursement is made from petty cash. The voucher would show the date, amount, recipient, purpose and general ledger account number relating to the expense. The person giving out the petty cash and the person receiving the petty cash would sign the voucher and any supporting documentation (such as receipts) would be attached

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Debit Memorandum form or document used by a seller to notify a buyer that the seller is debiting (increasing) the amount of the buyer's accounts payable due to errors or other factors requiring adjustments.

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NSF Check A check not honored by the bank on which it was written because of insufficient funds in the drawer's account. An NSF check is an overdraft.

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Bank Service Charge


This is an administrative expense which reports the fees incurred by a company for the expenses associated with its checking account transactions.

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Credit Memorandum form or document used by a seller to notify the buyer of merchandise that the buyer's accounts payable is being credited (decreased) due to errors or other factors requiring adjustments.

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Deposit in Transit A deposit that has been made but has not yet been posted by the bank and therefore is not yet reflected in the account balance.

10. Check cheque (or check in American English) is a document/instrument (usually a piece of paper) that orders a payment of money from a bank account. The person writing the cheque, the drawer, usually has a current account (British and HK), or checking account (US), or chequing account (CAN) where their money was previously deposited. The drawer writes the various details including the money amount, date, and a payee on the cheque, and signs it, ordering their bank, known as the drawee, to pay that person or company the amount of money stated. 11. Outstanding Check A valid check which, although possibly already cashed, has not yet been returned for processing to the financial institution from where it originated. 12. Voucher System Type of internal system used to control the cash (checks) being spent (written). The voucher system consists of vouchers, voucher files (paid and unpaid), voucher register that takes the place of the purchase journal, cash register that takes the place of the cash disbursement journal, and the general journal. This system ensures the person paying the bills that the

bills are proper and should be paid. On the due date a voucher is removed from the "unpaid" voucher file and forwarded to the firm's disbursing officer for final approval of payment. 13. Voucher Register Book where vouchers are listed, generally chronologically and numerically. 14. Check Register

It tracks your current balance with this check register. It has fields for the check number, date, description of transaction, credit(+), debit(-) and balance.