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Briefly describe the procedures your organization has on cas

Internal Control and Cash

1. Briefly describe the procedures your organization has on cash control. If you have no experience in such procedures what procedures do you believe is necessary in order to safeguard cash?

2. How much impact does Sarbanes-Oxley Act (SOX) of 2002 have on your work, your company? You can explain the before and after SOX environment.

Ch. 8 - Reporting & Analyzing Receivables

3. Discuss your company's credit sales terms (i.e. what are they). If you are put into a position to make changes to your existing credit sales terms what would you be changing and why?

4. 4. What impact do you think the over- or under-accrual of bad debt allowance amount will have on a company under the current business environment of corporate malfeasance? Will that create more opportunity for "managing" the bottom line of a company?

Ch. 9 - Plant & Intangible Assets

5. What type of depreciation method does you company use to depreciate its assets? What impact will different depreciation methods have on a company's bottom line?

Ch. 7 - Internal Control and Cash
Ch. 8 - Reporting & Analyzing Receivables
Ch. 9 - Plant & Intangible Assets

6. What is a current asset? What is a noncurrent asset? What is the difference between the two types of assets? In which financial statement would you find these assets?

7. What is an example of a significant accounting estimate? What is the importance of these estimates? How do ethics play into the decision-making process? Which financial statements include significant accounting estimates? Why?

8. What are internal controls? Why do companies need them? What are some examples of internal controls? Who is responsible for developing internal controls?

Solution Preview

Ch. 7 - Internal Control and Cash

1. Briefly describe the procedures your organization has on cash control. If you have no experience in such procedures what procedures do you believe is necessary in order to safeguard cash?

- Procedures that should be adopted include a separation of duties within the cash cycle. No one person should have complete control over an single area that deals with cash, without another person (like the treasurer or CFO) verifying the logs and other documentation, even if it's on a periodic basis. One of the other important safeguards is to maintain a system where all ledgers and journals are also verified on a random basis to check the entries that have been made by employees. No employee should be permitted to give cash out for credits/refunds without proper approval from management, and all sales should be matched against other internal documentation, including receipts, invoices, or register tapes.

2. How much impact does Sarbanes-Oxley Act (SOX) of 2002 have on your work, your company? You can explain the before and after SOX environment.

- SOX holds a great deal of weight. Before SOX, we had companies that basically could do whatever they wanted, in a certain sense. After SOX, all public companies were held accountable to compliance. SOX is very effective, in my opinion. No one program will be 100% effective, because there will always be executives and others in position that are so focused on greed and dishonesty to gain personal wealth that they will do almost anything to achieve their goals. One of the main problems with SOX is that the cost of compliance is very high, but it's definitely worth the cost. We have seen what happens when regulations like SOX are not in place (Enron, WorldCom). In the after SOX environment, executives are forced to be accountable for the information in their company's financial statements. Ignorance, including, "well I didn't know" is no longer valid.

Ch. 8 - Reporting & Analyzing Receivables

3. Discuss your company's credit sales terms (i.e. what are they). If you are put into a position to make changes to your existing credit sales terms what would you be changing and why?

- Our credit sales terms are payable in full within 30 days, or ...

Solution Summary

Briefly describe the procedures your organization has on cash control. If you have no experience in such procedures what procedures do you believe is necessary in order to safeguard cash?

2. How much impact does Sarbanes-Oxley Act (SOX) of 2002 have on your work, your company? You can explain the before and after SOX environment.

Ch. 8 - Reporting & Analyzing Receivables

3. Discuss your company's credit sales terms (i.e. what are they). If you are put into a position to make changes to your existing credit sales terms what would you be changing and why?

4. 4. What impact do you think the over- or under-accrual of bad debt allowance amount will have on a company under the current business environment of corporate malfeasance? Will that create more opportunity for "managing" the bottom line of a company?

Ch. 9 - Plant & Intangible Assets

5. What type of depreciation method does you company use to depreciate its assets? What impact will different depreciation methods have on a company's bottom line?

Ch. 7 - Internal Control and Cash
Ch. 8 - Reporting & Analyzing Receivables
Ch. 9 - Plant & Intangible Assets

6. What is a current asset? What is a noncurrent asset? What is the difference between the two types of assets? In which financial statement would you find these assets?

7. What is an example of a significant accounting estimate? What is the importance of these estimates? How do ethics play into the decision-making process? Which financial statements include significant accounting estimates? Why?

8. What are internal controls? Why do companies need them? What are some examples of internal controls? Who is responsible for developing internal controls?

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