Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Five Components of Internal Controls

Financial Accounting

6. Internal Controls and Reporting Cash

Five Components of Internal Controls

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Multiple Choice

Which of the following is an internal control procedure for cash disbursements?

Requiring two authorized signatures on all checks

Allowing employees to approve their own expense reports

Recording cash disbursements only at year-end

Depositing all cash receipts at the end of the month

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Verified step by step guidance

Understand the concept of internal control procedures: Internal controls are processes and policies implemented by a company to safeguard assets, ensure accurate financial reporting, and promote operational efficiency. For cash disbursements, these controls aim to prevent fraud and errors.

Evaluate the first option: 'Requiring two authorized signatures on all checks.' This is a strong internal control procedure because it ensures that no single individual can authorize a disbursement without oversight, reducing the risk of fraud or unauthorized payments.

Evaluate the second option: 'Allowing employees to approve their own expense reports.' This is not an effective internal control procedure because it lacks oversight and increases the risk of fraudulent or inappropriate approvals.

Evaluate the third option: 'Recording cash disbursements only at year-end.' This is not a proper internal control procedure because timely recording of transactions is essential for accurate financial reporting and monitoring of cash flow.

Evaluate the fourth option: 'Depositing all cash receipts at the end of the month.' This is not related to cash disbursements and is also inefficient, as cash receipts should be deposited promptly to reduce the risk of theft or loss.