Scenario 1 Kerry owns and operates a small community pharmacy. John is the pharmacist and he employs a clerk to assist with collecting, reconciling and depositing the proceeds collected each week. Kerry leaves all the cash handling procedures to the clerk and simply confirms that cash was deposited at the end of the week. Scenario 2 Alex is also an entrepreneur who owns a business. Alex ensures that the employee who accepts payments and issues receipts is not the same person to prepare the deposits. Deposits are prepared and reconciled by another (more senior) employee who confirms the amount of cash collected based on the cash totals (from the register, receipt book or AIS). question 1 Compare the controls applied by the two scenarios. Question 2: Contrast the controls applied by the two scenarios. Question 3 What improvements would you recommend?
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Scenario 1
Kerry owns and operates a small community pharmacy. John is the pharmacist and he
employs a clerk to assist with collecting, reconciling and depositing the proceeds collected
each week. Kerry leaves all the cash handling procedures to the clerk and simply confirms
that cash was deposited at the end of the week.
Scenario 2
Alex is also an entrepreneur who owns a business. Alex ensures that the employee who
accepts payments and issues receipts is not the same person to prepare the deposits. Deposits
are prepared and reconciled by another (more senior) employee who confirms the amount of
cash collected based on the cash totals (from the register, receipt book or
question 1
Compare the controls applied by the two scenarios.
Question 2:
Contrast the controls applied by the two scenarios.
Question 3
What improvements would you recommend?
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