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Definition
| : Requires companies to review internal control and take responsibility for the accuracy and completeness of their financial report. |
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| The organizational plan and all the related measures adopted by an entity to 1. safeguard assets, 2. encourage employees to follow company policies, 3. promote operational efficiency and ensure accurate and reliable accounting records. |
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| COSO(Committee of Sponsoring Organizations) |
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Definition
| Provides thought leadership related to enterprise risk management, internal control, and fraud deterrence. |
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| A company that sells its stock to the general public. |
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| A report by management describing its responsibility for and the adequacy of internal controls over financial reporting. |
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Definition
1. Public companies must issue an internal control report, and outside auditor must evaluate the client's internal controls and report it.
2. PCAOB oversees the work of auditors of public companies
3. Accounting firms are not allowed to audit a public company and also provide consulting services for the same client.
4. Stiff penalties await violators-25 years in prison for securities fraud and 20 years for an excutive making false sworn statement. |
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| Component of internal control |
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Definition
| CRIME 1. Control procedures 2. Risk Assessment 3. Information System 4. Monitoring of Controls 5. Environment |
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Definition
| An employee of the business who ensures the company's employees are following company policies, and the company meets the requirement, and operation is running efficiently. |
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| An OUTSIDE ACCOUNTANT, Independent of the business, evaluates the control to ensure that financial statement are presented fairly in accordance with GAAP. |
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| Rearranging plain text messages by a mathematical process. |
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| Two or more people working together to circumvent internal controls and defraud a company. |
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1.Mailroom sends checks to treasures and remittance advice to the accounting department
2. Treasure has the cashier deposit the check in the bank. Cashier receives a deposit receipts. |
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Definition
3. Accounting department uses remittance advice to record the journal entry.
4. A Controller compares the following records for the day: Bank deposit from treasure. Debit to cash from ACC Dept. |
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Definition
| customer send checks to a post office box that belongs to a bank. A bank employee empties box daily and records the deposit for company's bank Account. |
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| Contains cash and petty cash ticket. cash+Petty cash=total cash fund balance. |
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| Replenishing the petty cash fund |
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Definition
DR Petty cash ticket (expense, supplies..), Cash short & over
CR Cash( petty cash ticket +short & over) |
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| Petty cash exceed it balance |
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Definition
DR Petty cash ticket (expense, asset)
CR Cash & short Over (exceed amount), Cash |
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Definition
Net: Total sale-Processing fee
Gross: Total sale deposits daily, processing fee deducted last day of the month |
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Term
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Definition
DR Cash, CR Card EXP
CR Sales Revenue |
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Definition
Daily: DR CASH CR Sales Revenue
Last day of the month: CR Card Ex DR Cash(same amt as CR EXP) |
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Definition
| Explain the reasons for difference between a company's cash record and cash balance in its bank account. |
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Definition
Record by company not yet by bank
Beginning Balance take from bank statement
+deposit in transit
- Outstanding check |
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Term
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Definition
Record by bank not yet by company
Beginning balance take from GL
+ Bank Collection/ CR Memorandum (receivable, lockbox)increase bank account
+ EFT for cash receipts+Interest revenue
-ETF for cash payment-Service Charge-NSF |
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Definition
Only record book side
Service Charge DR Bank Expense CR Cash
NSF Check refund DR ACC REC CR cash |
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Definition
The measure of a company's ability to pay current liabilities by cash and cash equivalent.
(CASH+CASH EQ)/Total current liabilities
Below 1 is good, Above 1 is bad. |
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Term
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Definition
| A highly liquid investment that can be converted into cash in three months or less. |
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