Chapter 7 Sarbanes-Oxley, Internal Control, and Cash 317advice, with their payment. The employee who opens the incoming mail should ini-
tially compare the amount of cash received with the amount shown on the remittance
advice. If a customer does not return a remittance advice, an employee prepares one.
Like the cash register, the remittance advice serves as a record of cash initially re-
ceived. It also helps ensure that the posting to the customer’s account is accurate.
Finally, as a control, the employee opening the mail normally also stamps checks and
money orders “For Deposit Only” in the bank account of the business.
All cash received in the mail is sent to the Cashier’s Department. An employee
there combines it with the receipts from cash sales and prepares a bank deposit ticket.
The remittance advices and their summary totals are delivered to the Accounting
Department. An accounting clerk then prepares the records of the transactions and
posts them to the customer accounts.
When cash is deposited in the bank, the bank normally stamps a duplicate copy of
the deposit ticket with the amount received. This bank receipt is returned to the Accounting
Department, where a clerk compares the receipt with the total amount that should have
been deposited. This control helps ensure that all the cash is deposited and that no cash
is lost or stolen on the way to the bank. Any shortages are thus promptly detected.
Separating the duties of the Cashier’s Department, which handles cash, and the
Accounting Department, which records cash, is a control. If Accounting Department
employees both handle and record cash, an employee could steal cash and change the
accounting records to hide the theft.Cash Received by EFT. Cash may also be received
from customers through electronic funds transfers. For
example, customers may authorize automatic electronic
transfers from their checking accounts to pay monthly
bills for such items as cell phone, cable, Internet, and
electric services. In such cases, the company sends the
customer’s bank a signed form from the customer au-
thorizing the monthly electronic transfers from the cus-
tomer’s checking acount to the company’s bank
account. Each month, the company electronically noti-
fies the customer’s bank of the amount of the transfer
and the date the transfer should take place. On the due
date, the company records the electronic transfer as a
receipt of cash to its bank account and posts the amount
paid to the customer’s account.The Lion King
HOW BUSINESSES MAKE MONEY
How many ways does The Walt Disney Companyearn
revenues from The Lion King?
The answer includes ticket sales for the animated
motion picture and any sequels, DVD sales, music
soundtrack sales, ticket sales for the Broadway play,
tickets and concession sales for Disney on Ice®, mer-
chandise and apparel sales, theme park attractions,
cable television programming, and video game
sales—to name just a few. Disney’s business ap-
proach is to develop a character, such as the Lion
King, and then develop multiple ways to earn rev-
enues from this key asset. Often, Disney will develop
new channels of distribution in order to support the breadthof product offshoots, such as a cable channel, merchandise
store, Broadway theater, or theme park.
Overall, the preceding approach has been very
successful in earning money for Disney. However,
this approach is based on continual development of
new characters from which to build a product uni-
verse. This is Disney’s key challenge as it moves to-
ward the world of computer animation, which is
now dominated by Pixar.Source:Adrian J. Slywotzky, David J. Morrison, and Bob
Andelman,The Profit Zone: How Strategic Business Design
Will Lead You to Tomorrow’s Profits(New York: Random House, 1997).© ROSE ALCORN/THOMSON