Ch 11 Cash

Liquidity

• ease with which asset can be converted to cash

Most Liquid Asset:

• Cash
• most in need of protection
• protect from:
• loss
• theft
• forgery
• embezzlement
• waste

Internal Controls

• strong personnel policies
• limit cash handlers
• separation of duties
• rotate duties
• force vacations
• bonding employees

• use banks, safes, and cash registers
• limit cash on-hand
• make daily deposits
• use pre-numbered checks or EFTs for payments
• change fund
• petty cash fund

• reconcile bank statements
• cash proofs
• approval process for payment