Internal Controls for Cash Receipts - Financial Accounting

The video tutorial discusses internal controls for cash receipts, focusing on over-the-counter receipts and the importance of using a cash register for accurate record-keeping. It explains the cash short and over account, used to reconcile discrepancies between cash register totals and actual cash. Examples illustrate how to journalize these discrepancies. The tutorial also covers internal controls for cash receipts by mail, emphasizing the need for dual control to ensure security and accuracy.

Why is it important to use a cash register for all sales?

• To avoid using credit cards

• To reduce the workload of employees

• To ensure a written record of cash inflow

• To increase sales

What is the purpose of the 'cash short and over' account?

• To increase company profits

• To reconcile discrepancies between expected and actual cash

• To track employee performance

• To manage inventory levels

How is a $5 shortage recorded in the 'cash short and over' account?

• As a revenue

• As a credit

• As a liability

• As a debit

Why should two people be involved in opening mail containing cash?

• To reduce the number of errors

• To train new employees

• To prevent collusion and ensure accuracy

• To speed up the process

What is the role of the record-keeper in handling cash receipts by mail?

• To prepare the list of cash received

• To enter the cash into the books

• To deposit cash in the bank

• To open the mail