Cash Control & Banking Activities. Chapter 11. What happens if a business fails to take steps to protect its assets and keep reliable records? Loss of cash Forgery Embezzlement Overdrawn accounts Inability to pay bills. What do you think?. Why do businesses need cash controls?
What happens if a business fails to take steps to protect its assets and keep reliable records?
Internal controls are steps to protect assets and keep reliable records
Allows a person or business to deposit cash in a bank and write checks against the bank balance
Authorized signature written or stamped on the back of a check to transfer ownership
Contains an itemized record of all transactions in a depositor’s account
Interest is paid on some accounts and must be recorded in the checkbook, journalized and postedBank Reconciliation
Three problems may occur when checks are written or received and deposited:
returned to the depositor because the drawer’s account does not have enough funds to cover the amount
EFTS handles large volume of funds transfers and allows banks to transfer funds among accounts quickly and accurately