Table of Contents
- 1 Why are internal control especially important in the areas of cash and receivables?
- 2 Why are internal controls important for inventory?
- 3 Who is ultimately responsible for the establishment and success of a company’s internal control system?
- 4 Why is it important to maintain a good internal control system over cash cash receipts and cash payment?
- 5 What does internal control mean in accounting?
Why are internal control especially important in the areas of cash and receivables?
Businesses that take in significant amounts of cash are vulnerable to theft, robbery and fraud. Companies establish systems of internal controls to minimize the risk of such incidents. The inherent vulnerability of cash and negotiable instruments such as checks and credit cards require healthy internal controls.
Why are internal controls important for inventory?
Internal controls can be thought of as checks and balances to prevent errors and losses in various areas of a business. Good inventory controls prevent losses and misstatements while helping in managing inventory levels. Since inventory is quite expensive, any measure to protect this investment should be considered.
Why is there need to maintain a good internal control system over cash cash receipts and cash payments?
By establishing procedures that maintain control over cash receipts and cash disbursements, your organization will be able to mitigate many of the financial risks associated with running a business, including inaccurate payments, theft, and fraud.
What is internal control and what does it protect?
Internal controls encompass all the methods and procedures that an organization adopts to protect its facilities, assets and property. In a broad sense, internal controls make it possible for an organization to lawfully conduct business operations without interference, loss or interruption.
Who is ultimately responsible for the establishment and success of a company’s internal control system?
23 Cards in this Set
| The Sarbanes-Oxley Act of 2002 applies to | All companies that file reports with the SEC. |
|---|---|
| Who is ultimately responsible for the establishment and success of a company’s internal control system? | The company’s top executives. |
Why is it important to maintain a good internal control system over cash cash receipts and cash payment?
Internal control procedures for the receipt of cash help your small business prevent loss due to employee fraud and accounting errors. The company should never use cash receipts from customers for petty cash or check cashing.
Why do companies need internal control what do you think can happen if companies do not establish internal controls?
Internal controls are processes designed to help safeguard an organization and minimize risk to its objectives. Internal controls minimize risks and protect assets, ensure accuracy of records, promote operational efficiency, and encourage adherence to policies, rules, regulations, and laws.
What are internal controls for cash?
To control cash transactions, organizations should adopt some of the following practices: Require background checks for employees, establish segregation of duties, safeguard all cash and assets in secure locations, and use a lockbox to accept cash payments from customers.
What does internal control mean in accounting?
Internal controls are the mechanisms, rules, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.