Answer:
Items of Cash : Cash and Till float
Risks : Fraud and Theft
Controls : Segregation of duties over the receipt and recording of money and Every cashier should only be responsible for his own funds.
Test of Controls : Do a surprise cash count and Enquire about and observe the controls over cash by management
Explanation:
Bank and cash transactions occur on a daily basis in all businesses. Although the cash and bank balances may not individually be significant, annually the volume of cash and payment transactions and bank deposits can be significant to the entity.
Items of Cash
Cash balances comprise the following:
Risks
Cash is highly susceptible to fraud and theft by employees, often in collusion with third parties.
To mitigate this risk related to cash balances, management will usually implement strict control policies and procedures for cash handling and recording.
Controls in the bank and cash cycle can be divided into 2 categories:
Basic Controls
- Segregation of duties over the receipt and recording of money.
- Different forms of cash (sales, petty cash, cash loans) should be kept separately and recorded separately.
- Proper stationery control. Receipts, cash sales slips/invoices must be numerically recorded
- Safeguarding of money. Cash must be locked in a Volt and deposited as soon as possible. You would also need control over the key to the Volt.
Control over Cash
- Cashier must balance cash on a daily basis and must compare it with the source documents (receipt, cash invoices, cash register totals) and record it on a cash receipt summary. The Cash Receipt Summary must be Signed by the Cashier, Independently reviewed by the Senior Official.
- Every cashier should only be responsible for his own funds. Usually during lunch. Cash registers must be locked away.
- Every cashier should be responsible for his own float. They should lock in Cash Drawer.
- Supervision over cashiers. Through the use of Cameras.
- Cash must be banked as soon as possible.
Audit approach for testing these accounts
- Enquire about and observe the controls over cash by management.
- Do a surprise cash count (also attend on a surprise basis the daily balancing of cash). In the presence of a Cashier who signs back of the receipt, agree the cash with the supporting documentation (receipts, cash invoices, cash register total) and follow the float through to the balance in the ledger.
- At a later stage follow the cash counted through to deposit slip, and agree it with the cash counted, ensure they are banked timeously and follow the total of the deposit slip through to the cash book and bank statement.
Answer: The correct answer is
b. Memos are commonly written to people within your own organization.
Explanation: Memos are written form of communication in a formal setting. They are written to people within the same organisation.
Memos contain a 'from' and 'to' headings as well as a subject. This helps give the receiver a clear picture of the purpose of the communication as often times the reader skims through the memo to get a clue of the content.
Interest expense is not Incurred on long-term liabilities.
Option i) Incurred on long-term liability.
Interest expenses are not recorded in the balance sheet. It should be recorded in the income statement.
The interest expense is a non-operating expense recorded on the expenses side of the income statement and it does not show as notes payable.
The interest expense is shown as a fixed cost or fixed expense it will be changed as based on the short-term changes or completion of payable.
The interest expense shows a factor in determining a company's borrowing risk.
Learn more about interest expenses at
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Answer:
exculpatory clause
Explanation:
Exculpatory clause in contracts is a clause that protects the person issuing it from liabilities of damages to an asset that may not be in their possession or out of their control. It prevents one party from the holding the other liable for damages to an asset during the execution of a contract. This is what Jack has done to protect himself from the liabilities that may result from any damages during the contract.
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