today we had accounting class it was really interesting subject for me..i m so happy and i think i can do accounting for my P.H.D:)
TODAY LECTURE:
Most
companies have a credit department to evaluate customers’ credit applications.
The extension of credit requires a balancing act. The company doesn’t want to
lose sales to good customers, but it also wants to avoid receivables that will
never be collected. For good internal control over cash collections from
receivables, the credit department should have no access to cash.
Additionally,
those who handle cash should not be in a position to grant credit to
customers. For example, if a credit
department employee also handles cash, the company would have no separation of
duties. The employee could pocket money
received from a customer. He could then label the customer’s account as
uncollectible, and the company would write off the account receivable, as
discussed in the next section. The company would stop billing that customer,
and the employee would have covered his theft. For this reason, separation of
duties is important.
was good ?isnt it?
