Cash & Internal Controls

Cash is the asset most exposed to error and theft, which is why it gets its own controls and its own reconciliation. The chapter opens with the principles of internal control as they apply to cash — separating the people who handle it from the people who record it, making one person responsible for each task, and matching orders, receipts and invoices before anything is paid. It then runs the two routines every business uses: the imprest petty cash fund, including what to do when the box comes up short, and the monthly bank reconciliation. You will sort each difference to the side it belongs on, record only what the books did not already know, and work through a statement where the business and the bank have each made a mistake. An optional final section shows the petty cash journals under US GAAP.