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What are the controls needed to secure the petty cash fund?

Short Answer

Expert verified

There are three controls needed to secure the petty cash.

Step by step solution

01

Definition of petty cash fund

The petty cash fund is the fund used to make the payment of miscellaneous expenses.

02

Controls needed to secure the patty cash fund

  1. The control of the petty cash fund needed to allot a sufficient amount into the petty cash fund.
  2. The control of the petty cash needed to assign the responsibilities of the petty cash fund to the person.
  3. The control of the petty cash fund needed to make the payment of the petty cash fund with a petty cash ticket.

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Most popular questions from this chapter

: Identifying timing differences related to a bank reconciliation

For each timing difference listed, identify whether the difference would be reported on

the book side of the reconciliation or the bank side. In addition,

identify whether the difference would be an addition or subtraction.

a. Deposit in transit

b. Bank collection

c. Debit memorandum from bank

d. EFT cash receipt

e. Outstanding checks

f. \(1,000 deposit erroneously recorded

by the bank as \)100

g. Service charges

h. Interest revenue

i. \(2,500 cash payment for rent

expense erroneously recorded by

the business as \)250

j. Credit memorandum from bank

Understanding internal control, components, procedures, and laws

Match the following terms with their definitions.

1. Internal control

2. Control procedures

3. Firewalls

4. Encryption

5. Environment

6. Information system

7. Separation of duties

8. Collusion

9. Documents

10. Audits

11. Operational efficiency

12. Risk assessment

13. Sarbanes-Oxley Act

a. Two or more people working together to overcome internal controls.

b. Part of internal control that ensures resources are not wasted.

c. Requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports.

d. Should be prenumbered to prevent theft and inefficiency.

e. Limits access to a local network.

f. Example: The person who opens the bank statement should not also be the person who is reconciling cash.

g. Identification of uncertainties that may arise due to a companyโ€™s products, services, or operations.

h. Examination of a companyโ€™s financial statements and accounting system by a trained accounting professional.

i. Without a sufficient one of these, information cannot properly be gathered and summarized.

j. The organizational plan and all the related measures that safeguard assets, encourage employees to follow company policies, promote operational efficiency, and ensure accurate and reliable accounting data.

k. Component of internal control that helps ensure business goals are achieved.

l. Rearranges data by a mathematical process.

m. To establish an effective one, a companyโ€™s CEO and top managers must behave honorably to set a good example for employees.

What is internal control?

Question: How does the Sarbanes-Oxley Act relate to internal controls?

Question: What is the difference between an internal auditor and an external auditor?

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