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The Office Procedures and Technology Chapter 6 Processing and Understanding Financial Information Copyright© 2007 Thomson/South-Western.

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Presentation on theme: "The Office Procedures and Technology Chapter 6 Processing and Understanding Financial Information Copyright© 2007 Thomson/South-Western."— Presentation transcript:

1 The Office Procedures and Technology Chapter 6 Processing and Understanding Financial Information Copyright© 2007 Thomson/South-Western

2 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

3 Slide 3 Safeguarding Cash Topic 6-1 Cash and Banking Procedures Separation of duties is a type of preventive internal control Processing Customer Payment Checks Mail ClerkCashierAccounting 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

4 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

5 Slide 5 Sales Invoice Topic 6-1 Cash and Banking Procedures

6 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

7 Slide 7 Statement of Account Topic 6-1 Cash and Banking Procedures

8 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

9 Slide 9 Preparing Deposits Topic 6-1 Cash and Banking Procedures Endorse checks

10 Slide 10 Preparing Deposits Topic 6-1 Cash and Banking Procedures Complete a deposit slip

11 Slide 11 Making Deposits Topic 6-1 Cash and Banking Procedures In person at a bank Electronically using an ATM Using a lockbox address

12 Slide 12 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

13 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

14 Slide 14 Voucher Topic 6-1 Cash and Banking Procedures A voucher provides information and approval to make a payment

15 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

16 Slide 16 Checks Topic 6-1 Cash and Banking Procedures Complete the check register entry before preparing a check

17 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

18 Slide 18 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

19 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

20 Slide 20 Bank Statement Topic 6-1 Cash and Banking Procedures

21 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

22 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

23 Slide 23 Bank Reconciliation Topic 6-1 Cash and Banking Procedures This bank reconciliation shows five outstanding checks

24 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

25 Slide 25 Petty Cash Record Topic 6-1 Cash and Banking Procedures A petty cash record shows receipts and payments

26 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

27 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

28 Slide 28 Income Statement Topic 6-2 Financial Reports and Payroll A projected income statement is part of a company’s financial plan

29 Slide 29 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

30 Slide 30 Balance Sheet Topic 6-2 Financial Reports and Payroll This balance sheet shows projected figures

31 Slide 31 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

32 Slide 32 W-4 Form Topic 6-2 Financial Reports and Payroll

33 Slide 33 Compensation Plans Topic 6-2 Financial Reports and Payroll Salary Hourly Commission Combination plans

34 Slide 34 Payroll Records Employee earnings record Payroll register Wage and Tax Statement (W-2 form) Topic 6-2 Financial Reports and Payroll

35 Slide 35 Employee Earnings Record Topic 6-2 Financial Reports and Payroll

36 Slide 36 Payroll Register Topic 6-2 Financial Reports and Payroll

37 Slide 37 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


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