Internal Controls for Cash Disbursements - Accounting

The video tutorial covers essential cash management systems, including anti-safeguards, voucher systems, and petty cash management. It emphasizes the importance of security measures like requiring checks for expenditures and maintaining a paper trail. The voucher system is explained as a method to control cash disbursements, especially for travel expenses, by using a reimbursement process. The petty cash system is described as a way to handle small, immediate expenses, with a focus on proper documentation and replenishment procedures.

What is one method mentioned to prevent theft in financial transactions?

• Avoiding any form of documentation

• Allowing open access to financial records

• Requiring expenditures to be made by check

• Using cash for all transactions

How does a voucher system enhance security in cash disbursements?

• By providing a lump sum of money upfront

• By requiring approvals and reimbursements

• By allowing unrestricted spending

• By eliminating the need for receipts

What is the primary purpose of a petty cash fund?

• To handle large business transactions

• To replace the need for checks

• To store excess company profits

• To make small expenditures quickly

What is the initial step in establishing a petty cash fund?

• Calculating monthly expenses

• Withdrawing cash from the main account

• Recording all transactions immediately

• Requesting approval for each expense

In the example provided, what is the total amount used from the petty cash fund?

• $323.57

• $76.43

• $500.00

• $400.00

How is the discrepancy between debits and credits resolved in petty cash transactions?

• By adjusting the petty cash fund

• By using a cash short and over account

• By ignoring the difference

• By recalculating all expenses

What happens to the petty cash fund after replenishment?

• It is closed permanently

• It is increased by the amount spent

• It remains at the original amount

• It is reduced to zero