Internal Controls

 

In this presentation we will introduce the topic of internal controls. Internal Controls been policies within an organization in order to achieve certain objectives those objectives including the safeguarding of assets, having reliable accounting records, efficient operations, and company policy alignment. We’ll get further into what each of these categories mean in detail. However, first we want to discuss the fact that internal controls will change from organization to organization and industry to industry will have similar objectives between organization to organization industry to industry, however, the customization of the internal controls will differ in order to have an optimal amount depending on size of company and type of industry. For example, a small company often one run by one individual will have very much fewer internal controls for multiple reasons. One that that individual can really monitor A lot more of the transactions for a small company and have direct contact with the transactions that are taking place.

Lower of Cost or Market

In this presentation we will discuss the concept of lower of cost or market. We will define this concept first and then see it and talk about how it would apply to inventory. The definition of lower of cost or market according to fundamental accounting principles, while 22nd edition is required method to report inventory at market replacement cost when that market cost is lower than recorded cost. So, what we’re saying here is we have we’re talking about the inventory, of course, and we’re saying that we have to record it at the replacement cost. When that replacement cost that market cost is lower than the recorded cost, what we actually purchased it for. So this looks like a confusing type of definition. However, it’s pretty straightforward. What we’re applying here is going to be the conservative principle meaning that if our inventory has declined in value, we have to record it at the lower cost. We don’t want to be overstating our income mentoree obviously regulations are very concerned about us overstating something, when we’re talking about an asset, and making the financial statements look better than they would rather than understating it.

Accounts Payable Transactions Accounting Equation 170

So there’s gonna be problems later on where they’ll basically say, you know, you got to pay off something on account and you have to assume that the prior transaction took place. You got to kind of know in your mind how these things are related. So if we go through them by cycle that will help to achieve that goal. first transaction, we’re going to say purchase supplies on account. If we go through our list of questions, we’re going to say is cash affected? In this case? No, because we purchased it on account, then we’re going to ask what we’ve received, in this case supplies. So we got supplies, that is here, it’s going to be an asset. Therefore the asset is going to go up because we got more of them, then the only question is, what is the other account? It’s not a decrease to cash because we didn’t pay cash. And therefore we must be doing something somewhere else. That will be accounts payable, so accounts payable is going to increase by the same amount.

Financial Transaction Rules 155

Hello in this presentation we will be discussing the transaction rules financial transaction rules as they relate to recording financial transactions with regard to the accounting equation. At the end of this, we will be able to list transaction rules explained our reasons for the transaction rules and apply transaction rules to recording financial transactions. First rule, at least two accounts will be affected. It’s going to be whenever we record any transaction and whether we’re talking about a transaction for recording payroll record an accounts receivable, recording accounts payable, all those normal things that the accounting department does on a day to day basis.

Balance Sheet & Income Statement Relationship 132

Hello in this presentation we will discuss the balance sheet and income statement relationship. Objectives at the end of this we will be able to define the balance sheet and list its parts, define the income statement and list its parts and explain how the income statement relates to the balance sheet. When considering these concepts in terms of the balancing concept of the balance sheet in particular, we want to keep in mind the idea of the double entry accounting system. The double entry accounting system being the main system the main internal control, that we are always keeping in mind that internal control helping us to safeguard against making errors that’s our first line of defense against making errors is the double entry accounting system, which can be expressed in a few different ways.

Balance Sheet 120

Hello in this presentation that we will discuss the balance sheet objectives at the end of this presentation that we will be able to describe the balance sheet, list the components of the balance sheet and define and explain each component of the balance sheet. When considering the balance sheet, we will be looking at components equivalent to those in the accounting equation. the accounting equation as we have seen in a prior presentation is assets equal liabilities plus equity, these will be the components of the balance sheet.

Accounting Equation 115

Hello in this presentation we will discuss the accounting equation. At the end of this we will be able to name the accounting equation, explain the components of the accounting equation and explain the balancing concept related to transactions. The double entry accounting system can be recorded in a few different ways, at least three different ways. It’s useful to understand these three different ways. The first way the one we will be concentrating on here will be in the format of the accounting equation, assets equal liabilities plus owner’s equity or just equity.