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

Slide 11

Making Deposits

Topic 6-1 Cash and Banking Procedures

In person at a bank Electronically using an ATM Using a lockbox address

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

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

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

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

Slide 28

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

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

Slide 30

Balance Sheet

Topic 6-2 Financial Reports and Payroll

This balance sheet shows projected figures

This balance sheet shows projected figures

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

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

Slide 34

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