Acct201A Chapter 04 - Cash and Internal Controls

bank reconciliation

matches the balance of cash in the bank account with the balance of cash in the company’s own records/accounts

error

fraud

NSF checks

subtract from the book balance; bank statement

checks outstanding

checks written by the company but not yet reflected as a decrease in the bank’s cash balance; subtracts from the bank balance; cash disbursements

deposits outstanding

cash received by the company but not yet reflected as an increase in the bank’s cash balance; adds to bank balance; cash receipts

cash disbursements

petty cash fund

cash on hand to pay for minor purchases; operated by the petty cash custodian

purchase cards

company-issued credit and debit cards

two financial statements that companies record in

balance sheet and statement of cash flows

operating activities

cash transactions involving revenue and expense events during the period

financing activities

transactions designed to raise cash or finance the business

investing activities

cash transactions involving long-term assets and investment securities

Sarbones-Oxley Act (SOX)