Internal
Control and
Accounting
for Cash
McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
Key Features of Internal Control
1. Separation of Duties
2. Quality of Employees
3. Bonded Employees
4. Required Absences
5. Procedures Manual
6. Authority and Responsibility
7. Prenumbered Documents
8. Physical Control
9. Performance Evaluations
6-2
Separation of Duties
6-3
Quality of Employees
6-4
Bonded Employees
6-5
Required Absences
6-6
Procedures Manual
6-7
Authority and Responsibility
6-8
Prenumbered Documents
6-9
Physical Control
6-10
Cash Short and Over
When using a cash register, employees
sometimes make mistakes in collecting cash or
making change for customers. If the cash
register does not reconcile by a small amount at
the end of the day, we use an account called
cash short and over to force a balance.
Assume a cash
register was to have Account Title Debit Credit
a balance of $487.50, Cash 486.50
but contained only Cash short and over 1.00
$486.50 at the end of Sales 487.50
the day.
6-11
TEST QUESTION: Petty Cash
On April 30, 2006, Southern Company established a
petty cash fund of $1,000. On May 1, 2006, a
disbursement of $250 was made from the fund for
payment of delivery expense. What is the initial entry to
start the fund on April 1st?
6-13
Limitations
6-14