BUS 251 Lecture Notes - Internal Control

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 251
• Professor: All

Document Summary

Chapter 6 cash short-term investments and accounts and notes receivable. Short term investments: indications that a comp is managing cash; doesn"t need immediately and investing it to generate income rather than lie idle. Monetary assets = those terms ^ are cash or will be cash = value is fixed in current monetary terms. Difficult to control in terms of handling and recording. Assets : controlled by company, expected to provide future economic benefits from use or sale, arose from past event. All comps must establish effective internal control procedures to govern how they handle cash: auditors review internal controls and design special audit procedures to test if controls are safegaurds to handle and record cash. Purchasing power = cash meets future econ benefit criterion derives its value from ability to be exchanged for goods and services in future: convert into goods/services, affected by inflation (cash has loss in value) and deflation.