Ch4 hw acc203 - Mandatory chapter homework for financial accounting, acc 203, professor guerrasio PDF

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Mandatory chapter homework for financial accounting, acc 203, professor guerrasio...

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Professor Guerrasio ACC 203 23 February 2017 Chapter 4 Homework 2. What is internal control? Why should a company establish an internal control system?  Internal control is a company’s plan to safeguard the company’s assets and improve the accuracy and reliability of accounting information. It prevents misuse of company funds by employees and fraudulent or errant financial reporting. Strong internal control systems allow greater reliance by investors on reported financial statements. 5. What is meant by the fraud triangle, and what can companies do to help prevent fraud?  The three elements present for every fraud are motivation, rationalization, and opportunity. To minimize fraud at least one of the three elements must me eliminated. Companies have the greatest ability to eliminate opportunity. By doing that companies implement formal procedures like internal controls. 21. What is a bank reconciliation? How can it help in determining whether proper control of cash has been maintained?  A bank reconciliation matches the balance of cash in the bank account with the balance of cash in the company’s own records. Reconciling the bank account involves three steps: reconciling the bank’s cash balance, reconciling the company’s cash balance, then the company updates the balance in its cash account so that it can adjust....