Internal Controls [WLOs: 1, 3, 4] [CLOs: 1, 2, 4]
Prior to beginning work on this discussion, read Chapters 8 and 9 in the
textbook. In addition, the MyLab materials listed in the Recommended
Resources section this week may provide more in-depth information for this
discussion (optional).
Write: Make sure your response addressing the following questions is more
than 200 words and that you include an in-text citation or a brief quote from
the reading material where appropriate.
What is internal control and how can it protect a company’s assets?
What are the various internal control procedures with respect to
cash receipts and payments?
When preparing a bank reconciliation, what are the different
adjustments that affect the book and bank side?
Why do journal entries need to be prepared after completing the
bank reconciliation?
Provide three example journal entries with a description of the
adjustment.
ACC205 Week 4 Discussion 1
Internal control is a series of procedures that help protect a company's assets. Failure to attribute
internal control can result in a loss of assets. Internal controls help to assign different people in
the accounting department (Kenton, 2021). It helps create a workflow in the company and
creates an ethical environment. Internal control helps in good record keeping of the cash receipts.
In the case of cash receipts emailed, the one in charge in the finance department gets to compare
if the emailed cash receipts are in line with the record kept in the books. The company is also
keen to ask for receipts to prove that a particular customer has made a payment (Miller-Nobles,
2018). Failure to prove a cash receipt can fail one being refunded or goods being delivered.
Various factors affect the bank reconciliation procedures; for instance, when a cheque is
written off in the bank, then there will be a difference in the book records causing an adjustment
in the book as the cheque will be credited. Deduction fees by the bank for the services rendered
also result in the adjustment of the bank reconciliation, causing a credit record in the book.
Journal entries are important as they give an account, and a wrong entry can easily be traced in
the case of a wrong entry. Examples of journal entries:
Interest revenue
Date Description Post. [Link]
20–
Sept 30Checking Account 1011 3.00
Sept 30 Interest Revenue 4310 3.00
Sept 30To record interest revenue per Sept bank statement
service
Post.
Date Description Debit Credit
Ref.
20–
Sept
Checking Account 1011 3,000.00
30
Sept
Bank fee 5755 500.00
30
Sept
Notes Receivable 1600 3,500.00
30
Sept To record the collection of past-due notes and related
30 collection fees.
NSF
Description Post. [Link] Credit
Date
20–
Sept 30Accounts receivable 1200 350.00
Sept 30 Checking account1011 350.00
Sept 30To record NSF check
References
Kenton, W. (2021, September 3). Internal Controls.
Miller-Nobles, T. L. (2018). Horngren’s Accounting (12th ed.). Pearson.
