Internal Controlsin in the Business World

 Internal Controlsin in the Business World  Assignment example
Undergraduate
Assignment
Finance & Accounting
Pages 4 (1004 words)
Download 0
Abstract In the business world companies must utilize accounting tools in order to implement mechanisms to prevent losses associated with theft and fraud. The use of internal control is the best way for companies to safeguard their assets. An accounting system is supposed to be precise and accurate…

Introduction

Prepaid expenses are an asset that a company must reflect in its balance sheet. The prepaid asset reduces in value through consumption as time passes. The contract value of the prepaid insurance was $6000 a year. After the passage of three months the firm was supposed to record $1500 worth of depreciation of the prepaid insurance asset to recognize the consumption of the insurance. The adjusting entry that should have been recorded each month was a $500 debit to insurance expense and a credit of $500 to prepaid insurance. The credit is reducing the balance of the prepaid insurance asset. After three months the company’s financial statements are not accurate because the firm did not record the corresponding adjusting entry that was required. In the balance sheet of the company the current assets account is going be overstated by $1500. In the income statement the net income of the company is going to be overstated by $1500 due to the fact that insurance expenses for that amount were not recognized during the period. One of the most important assets which must be safeguarded with accounting internal control mechanisms is the cash of the company. ...
Download paper
Not exactly what you need?

Related papers

Business Behavior in a Changing World II
Creativity is considered central to innovation, seen as a complex process. Issues surrounding knowledge diffusion and intellectual property rights discussed. Policy should align research (academia) and funds (industry) within a broad innovation policy. Organisational use of technology seen as means of improving social and economic conditions within the country. Costing of R&D is discussed,…
Organisational Behaviour (Motivation in the Modern Business World)
Organisational contribution to employee motivation 14 4.1 Role of Organisational culture 14 4.2 Role of organisational systems 14 4.3 Role of leadership 16 5 Current issues and recommendations: 18 6 Conclusions 19 References Appendices Abstract This report explores the role of motivation on organizational behaviour. This is accomplished by understanding the concept of motivation and its…
Internal Controls Assignment
The Sarbanes-Oxley Act of 2002 was passed generally for the purpose of restoring investor trust and confidence. The demand of the government, investors and the American public sought a standard and guarantee on the accuracy of financial reports. So, Section 404 of the mentioned law was strictly devoted in requiring management to assess and report on the effectiveness of internal control over…
Accounting: Internal Cash Control
These modifications in our company’s policy with regard to internal cash control shall help us keep track of our most liquid asset. Firstly, it is recommended that checks should only be signed by the treasurer. Duties should be segregated so that the purchasing agent should only be given the responsibility to approve arrival of goods. Payment and record keeping should be done by the treasurer.…
Internal Cash Control
On the other hand, both the purchasing agent and treasurer issue check disbursements for expenses without each other’s accountability there is a likelihood of fraud taking place because only one person grants authority for payments. Q4.5 (b) memo indicating recommendations for improving company procedures From: Your NamesXXX To: Idaho Company Management Subject: Internal Cash Control Weaknesses…
Internal Control
Today most organizations utilize computerized accounting systems. The employee that bares the responsibility over the design and functionality of the internal control system of a company is its comptroller. A good internal control system relies on the delegation of responsibilities to the different members of the accounting staff. Internal control systems must be constantly maintained. When…
Internal Controls
Cash is the most important asset of a company due the fact it can be used to pay for the purchases, payroll, and debt obligation of a firm (Deloitte). In the past I have been exposed to internal controls in the workplace. The section below discusses four experiences of mine with internal controls in the workplace. Example #1 A few years ago I worked for a company that had just been opened. The…