Cash and Internal Control

 Fraud Triangle  STRESS  OPPORTUNITY PRESSURE

 Separation of Duties  Physical Controls  Proper Authorization  Employee Management

RECONCILATIONS--- Cash, Inventory, A/R, A/P PERFORMANCE REVIEWS Recording Transactions Sound Personnel Policies BRIEF EXERCISE 4-3 PG 193 EXERCISE 4-4 PG 197 E4-6, PG 197 INTERNAL CONTROL

 Cash on hand  Cash in the Bank  Petty Cash  Cash Equivalents: anything that turns into cash in 90 days or less : Treasury Bills, 90 day CD  CASH SALES  Cash receipt = checks, cash, debit card  Credit Card = credit card payable not cash  BE 4-4 PG 194 E 4-5 PG 197

 Bank = Book -o/s checks+interest +Deposit in Transit-bank charges +N/R & interest -NSF Checks +EFT -debit/svc fee Pg 178 Bank Statement CASH ACT –G/L PG 178 Pg 180 Bank Reconcilation

 Always has a debit (increase) or credit (decrease) to cash  Cash Increase is revenue or notes receivable  Cash Decrease is expenses, assets or Accounts receivable  Pg 181

 Do 4-12 pg 198  Do 4-13 pg 198

 Petty means small  JE for Set up and increase  Petty Cash  Cash  JE to Replenish  Expenses  Cash  Ex 4-14, 4-15

Net income that is backed by cash is more likely to persist into the future than is net income not backed by cash. Operating – Cash inflows, Cash outflows Investing- investing in yourself and others Financing – debt and equity (company’s stock) Direct and Indirect Methods Direct used by CFE – pg 186 illustration 4-11 Indirect mostly used by corporations

 E4-16 Classifications  E4-17 Net Cash Flows  Pg 199

 P4-2A, P4-3A Bank Reconciliation  P4-5A Cash Acct and Cash Flow Statement