ch 7 terms Flashcards
(32 cards)
define internal control
adopted system helps companies a reliable financial reporting, operations, faithful rep, verifiability
control activities
assignment of responsibilities
segregation of duties
documentation
physical safeguard/control
review and reconciliation
what is segregation of duties
everyone doesn’t have to do everything
what is documentation
evidence that events occurred
what is physical safeguard/control
passwords, vaults
what is review and reconciliation
subject to int. and ext. review
what limits internal controls?
cost/benefit consideration, human error, collusion, management override
define fraud
intentionally stealing assets or misstating financial info
define bank reconciliation
making bank account and book records match at the end of period
define outstanding cheque
written by company
not received by receiving party yet
define outstanding deposit
deposit in transit to bank, not yet received
define NSF cheque
non sufficiently funds cheque. it bounced bc account was too small to be withdrawn from
define cancelled cheque
everything already cleared and gone through. cheque cannot be cashed a second time
define EFT in
Electronic fund transfer already recieved by bank, not clocked by books
define EFT out
already taken from bank, not clocked by books
define deposits in transit
receipts recorded by company but not recorded by bank yet
define service charges
bank charges to company
define interest revenue
bank pays interest to account holder
reconciliation for outstanding cheque
deduct from bank
reconciliation for outstanding deposit
add to bank
reconciliation for NSF cheque
deduct from book
reconciliation for cancelled cheques
no recon
reconciliation for EFT IN
add to book
reconciliation for EFT out
deduct from book
