Learning Unit 4

Question 1

Internal control over cash

(Methods not explanations)

Answer 1

1. Division of Duties
2. Completing source documents
3. Depositing cash
4. Payment made by credit card or EFT
5. Bank verification

Question 2

Explain:

Divison of Duties

Answer 2

Person responsible for cash receipts and payments should have nothing to do with accounting records. If cash is misappropriated by cashiers the accountants can pick it up

Question 3

Explain:

Completing source documents

Answer 3

Documents should be completed for each cash receipt, source documents should be numbered beforehand and completed in numerical order. Accounting records must be verified by accountants.

Question 4

Explain:

Depositing cash

Answer 4

Deposit cash received everyday. Misappropriation can be found immediately, loss due to theft can be eliminated. Point of Sale systems (POS) can generate these totals

Question 5

Explain:

Payment made by credit card or EFT

Answer 5

Payments should be made by (cheque), credit card or EFT. Payments should be authorised by two different people and relevant documentation should be provided. Control over credit cards is very important, should be authorised use only.

Question 6

Explain:

Bank verification

Answer 6

Accountants have to compare entity cash records to bank statements.