This document is the first lecture for an Accounting II class taught by Dr. Hamdy Kados. It discusses internal controls, fraud, and cash disbursement controls. Specifically, it defines cash and fraud, explains why fraud occurs and how to decrease it through internal controls. It then lists the components and principles of internal control systems and cash disbursement controls like petty cash funds.

1. Accounting II
Dr.Hamdy Kados
1st Lecture
Written By: Hos Sam
2/20/2012

2. Accounting II FCES
Chapter 8 – Cash
Cash :
“Any assets (Money) which can be accepted by the bank.”
Fraud:
“Dishonest act by an employee that results in personal
benefit to the employee at a cost to the employer.”
 Why does fraud occur ?
1. Opportunity.
2. Financial pressure.
3. Rationalization.

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3. Accounting II FCES
How to decrease fraud ?
 Internal Control :
1. Safe guard assets.
2. Enhance accuracy and reliability of accounting
records.
3. Increase efficiency of operations.
4. Ensure compliance with laws and regulations.


Components of internal control systems:
1. Control environment.
2. Risk assessment.
3. Control Activities.
4. Information and communications.
5. Monitoring.
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4. Accounting II FCES

Principles of internal control activities :
1. Establishment of responsibility.
2. Segregation of duties.
3. Documentation procedures.
4. Physical controls.
5. Independent internal verification.
6. Human resource control.
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5. Accounting II FCES
Cash Disbursement Controls:
Petty cash Fund – Used to pay small
amounts.
 Involves :
1. Establishing the fund.
2. Replenishing the fund.
In Journal Entries
Example :
Title Dr Cr
1.Petty cash Fund 400
Cash 400
2.Telephone Exp. 150
Transportation Exp. 150
Cash 300
3. Making payments from the fund.
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6. Accounting II FCES

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