8

Question 1

What are the 4 internal control policies and procedures used by managers?

Answer 1

1. Protect assets
2. Ensure reliable accounting
3. Promote efficient operations
4. Urge adherence to company policies

Question 2

What are the 7 principles of internal control common to all companies?

Answer 2

1. Establish responsibilities
2. Maintain adequate records
3. Insure assets and bond key employees
4. Separate recordkeeping from custody of assets
5. Divide responsibility for related transactions
6. Apply technological controls
7. Perform regular and independent reviews

Question 3

What are the 3 guidelines for handling and controlling cash?

Answer 3

1. Separate handling of cash from recordkeeping
2. Promptly deposit cash receipts in a bank
3. Make cash disbursements by check

Question 4

What are the 5 principles of effective cash management?

Answer 4

1. Encourage collection of receivables
2. Delay payment of liabilities
3. Keep only necessary levels of assets
4. Plan expenditures
5. Invest excess cash

Question 5

What does “Cash Over and Short” mean?

Answer 5

It refers to errors when the actual cash in the register does not match the recorded amount from cash receipts (e.g., too much or too little cash on hand).

Question 6

What is petty cash used for?

Answer 6

Small payments for items like postage, courier fees, repairs, and supplies in most companies.