The OfficeProcedures and Technology
Chapter 6
Processing and Understanding Financial Information
Copyright© 2007 Thomson/South-Western
Slide 2
Safeguarding Cash
Preventive internal control Detective internal control Corrective internal control
Topic 6-1 Cash and Banking Procedures
Fraud: imitate or counterfeit for illegal purposes
Key Term
Slide 3
Safeguarding Cash
Topic 6-1 Cash and Banking Procedures
Separation of duties is a type of preventive internal control
Separation of duties is a type of preventive internal control
Processing Customer Payment Checks
Mail Clerk Cashier Accounting Clerk
Delivers checks to cashier
1. Makes a list of checks received
2. Prepares deposit slip and makes bank deposit
1. Records customers’ payments
2. Verifies that the total payments equals the total checks listed
Slide 4
Sales Invoice
Created when a company ships goods or performs services
Includes information about the sale Includes seller’s and buyer’s contact
information
Topic 6-1 Cash and Banking Procedures
Accounts receivable: short-term debts owed to a company by others
Key Term
Slide 5
Sales Invoice
Topic 6-1 Cash and Banking Procedures
Slide 6
Statement of Account
Topic 6-1 Cash and Banking Procedures
Gives seller’s and buyer’s contact information Lists unpaid invoices as of a certain date Gives the total amount due
Slide 7
Statement of Account
Topic 6-1 Cash and Banking Procedures
Slide 8
Handling a Cash Drawer
Prove cash Handle shortages or overages
Topic 6-1 Cash and Banking Procedures
Proving cash: verifying that the proper amount of currency, checks, and bank card receipts are in a drawer
Key Term
Slide 9
Preparing Deposits
Topic 6-1 Cash and Banking Procedures
Endorse checks
Slide 10
Preparing Deposits
Topic 6-1 Cash and Banking Procedures
Complete a deposit slip
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Making Deposits
Topic 6-1 Cash and Banking Procedures
In person at a bank Electronically using an ATM Using a lockbox address
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Making Payments
Review documents Purchase requisition Purchase order Receiving report Invoice from vendor Credit memorandum
Topic 6-1 Cash and Banking Procedures
Accounts payable: short-term debts a company owes
Key Term
Slide 13
Voucher
Key the vouchers Obtain authorized signatures File vouchers by payment date
Topic 6-1 Cash and Banking Procedures
Tickler file: records or reminders arranged by date
Key Term
Slide 14
Voucher
Topic 6-1 Cash and Banking Procedures
A voucher provides information and approval to make a payment
A voucher provides information and approval to make a payment
Slide 15
Checks
Check the tickler file and retrieve vouchers Compute a discount if applicable Fill in the checkbook stub or register Create the check
Topic 6-1 Cash and Banking Procedures
Voucher check: check with an additional portion that gives a description of the payment
Key Term
Slide 16
Checks
Topic 6-1 Cash and Banking Procedures
Complete the check register entry before preparing a check
Complete the check register entry before preparing a check
Slide 17
Special Checks
Topic 6-1 Cash and Banking Procedures
Certified check Ordinary check Bank marks Certified and draws funds from account
Cashier’s check Written by a bank on its own funds Purchase with cash or ordinary check
Bank draft Drawn on a bank’s deposits in another bank Payable to a third party
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Electronic Funds Transfer
Topic 6-1 Cash and Banking Procedures
Funds transferred using a computer network No physical exchange of currency or checks Used for direct deposit of payments such as
wages
Slide 19
Bank Account Records
Bank statement Shows activity in the account May be accompanied by canceled checks or
notices Company records
Checkbook or register Last month’s reconciliation
Topic 6-1 Cash and Banking Procedures
Slide 20
Bank Statement
Topic 6-1 Cash and Banking Procedures
Slide 21
Reconciling a Bank Account
Purposes for the reconciliation Verify checks and withdrawals Identify outstanding deposits Identify outstanding checks Identify bank charges Determine the cash balance
Topic 6-1 Cash and Banking Procedures
Slide 22
Reconciling a Bank Account
Steps Record beginning balances Deduct bank charges from the register Add outstanding deposits to the bank balance Subtract outstanding checks from the bank balance Calculate adjusted balances
Topic 6-1 Cash and Banking Procedures
Slide 23
Bank Reconciliation
Topic 6-1 Cash and Banking Procedures
This bank reconciliation shows five outstanding checks
This bank reconciliation shows five outstanding checks
Slide 24
Petty Cash Fund
Used to pay small expenses Funds issued to the petty cashier Sales receipt required for each payment Petty cash receipt created Cash paid out
Topic 6-1 Cash and Banking Procedures
Slide 25
Petty Cash Record
Topic 6-1 Cash and Banking Procedures
A petty cash record shows receipts and payments
A petty cash record shows receipts and payments
Slide 26
Budget
Detailed plan for using resources Prepared for a period of time Created for the entire company and for
departments or groups Monitored periodically to identify variances
Topic 6-2 Financial Reports and Payroll
Slide 27
Income Statement
Topic 6-2 Financial Reports and Payroll
Created for a certain period of time Details the results of operations
Revenues Expenses Net profit or loss
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Income Statement
Topic 6-2 Financial Reports and Payroll
A projected income statement is part of a company’s financial plan
A projected income statement is part of a company’s financial plan
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Balance Sheet
Topic 6-2 Financial Reports and Payroll
Presents the financial condition of a company on a certain date
Lists assets, liabilities, and owner’s equity
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Balance Sheet
Topic 6-2 Financial Reports and Payroll
This balance sheet shows projected figures
This balance sheet shows projected figures
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Payroll
Lists salary, wages, or other payments for work due to employees
Procedures vary depending on the company type and size
Deductions from earnings Required by law Voluntary
Topic 6-2 Financial Reports and Payroll
Deductions: items that reduce gross pay
Key Term
Slide 32
W-4 Form
Topic 6-2 Financial Reports and Payroll
Slide 33
Compensation Plans
Topic 6-2 Financial Reports and Payroll
Salary Hourly Commission Combination plans
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Payroll Records
Employee earnings record Payroll register Wage and Tax Statement (W-2 form)
Topic 6-2 Financial Reports and Payroll
Slide 35
Employee Earnings Record
Topic 6-2 Financial Reports and Payroll
Slide 36
Payroll Register
Topic 6-2 Financial Reports and Payroll
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Focus On …
E-Commerce Planning Strategies Strategies widely used in the past
Mass production Customization
E-commerce is making mass customization popular
Companies rely heavily on market research with this strategy
Topic 6-2 Financial Reports and Payroll