Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 7 - Fraud, Internal Control, and Cash - Questions: 20


For Cash disbursements, the principles of internal control be applies as given below: 1)Physical controls 2)Documentation control

Work Step by Step

1) The cash is an asset and have to be properly stored. Before disbursement the cash must be counted, and kept at a secured place (locker, safe etc.) While disbursement, the activity should be recorded through CCTV, and at the end of day, it should be reconciled, and physically counted. For night vaulting proper security arrangement must be made. 2) Proper documentation serial order should be maintained, and documents should be stored in the order. The record of payments, must be reconciled with cash received - paid - balance at end. This reconciliation should be a part of the records.
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