Kế toán, kiểm toán - Chapter 7: Appendix

CHAPTER 7:APPENDIX2Chapter 7: Cash and ReceivablesAfter studying Appendix 7A, you should be able to: 11. Explain common techniques for controlling cash.3Using Bank AccountsUsing different bank accounts for different purposesGeneral chequing accountUsed for day-to-day activitiesImprest bank accountsUsed for specific purposesLockbox accountsUsed for collections in subsidiary locationsArrangements made with a local bank to pick-up and deposit funds receivedAllows for quicker collection and availability of cash4Imprest Petty Cash SystemDesigned for disbursements where payment by cheque is impracticalControl processes/procedures include the following:Designate a petty cash custodianCustodian is responsible for getting a receipt for each authorized disbursementCustodian prepares a summary of petty cash receipts and disbursements each time the fund requires reimbursementCheque is prepared and transactions recorded by someone other than the custodian5Imprest Petty Cash SystemCash Over and Short account used when the cash in the fund plus dollar amount of receipts does not equal the balance of the petty cash fundAdditional control procedures include:Unscheduled fund counts to ensure fund balance is maintainedReceipts are marked (after being submitted for reimbursement) in some way to ensure they cannot be used again6Imprest Petty Cash System: ExampleA petty cash fund is established for $300. A cheque is issued (for cash), with the following entry made:Petty Cash 300 Cash (Bank) 300No entries are required when petty cash disbursements are made7Imprest Petty Cash System: ExamplePetty cash is reconciled and replenished when the fund is low enough to warrant a cheque being issued or at the end of an accounting periodThe following disbursements were made: Office Supplies $42 Postage 53 Entertainment 76 Total $171The custodian counts the cash and finds there is $127 cash.The fund is $2 short ($300 – $171 = $129).Once the custodian has ensured that all receipts and cash have been accounted for, the $2 difference is considered Cash Over and Short.8Imprest Petty Cash System: ExampleA cheque is written for the required amount of $173 ($171 + $2). The entry to record the cheque is:Office Supplies Expense 42Postage Expense 53Entertainment Expense 76Cash Over and Short 2 Cash (Bank) 173What would the entry have been if it was decided to decrease the fund to $250?9Reconciliation of Bank BalancesEnsures there are no errors Ensures no omissions have occurred during the monthEnsures unusual transactions are properly recordedShould not be completed by the same person who writes cheques or completes the deposits10Bank Reconciliation:Reconciling Items Deposits in Transit: deposits that have been recorded in the books of account, but not yet by the bank Outstanding Cheques: cheques that have been recorded in the books of account, but have not yet cleared the bank Bank Charges: service, and other charges, made by the bank, but not yet recorded in the books of account Bank Credits: collections or deposits made by the bank, but not yet recorded in the books of account Bank or Depositor Errors: any unrecorded errors by either the bank or the company11Bank Reconciliation:Form and ContentBalance per bank statement (end of period) $$$Add: Deposits in transit $$ Undeposited receipts $$ Bank errors $$ $$ $$$Deduct: Outstanding cheques $$ Bank errors $$ $$Correct cash balance $$$Balance per depositor’s books $$$Add: Unrecorded bank credits $$ Book errors $$ $$ $$$Deduct: Unrecorded bank charges $$ Book errors $$ $$Correct book balance $$$12