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Unit 1: Introduction to the finance and investment cycle, 221141191 Unit…
Unit 1: Introduction to the finance and investment cycle
The cycle deals with:
Raising of funds
Interests and dividends associated with the funds
The application of the funds
Finance activities include:
Owners equity
E.g Shares
Borrowings
E.g Bank loans
Documents in the finance and investment cycle includes:
Capital budgets
Fixed assets requisition
Invoices
Minutes of Board of Directors
Fixed assets register
General ledger accounts
The control objectives:
Objectives that a company wants to achieve with regards to every transaction
Internal controls:
Validity or occurrence
Authorization
Completeness
Accuracy
Recording
Classification
Cut off
General control
Main activities in investment cycle:
Addition of assets
Disposal of assets
Repair and maintenance of assets
Weaknesses and risk meanings:
Weaknesses: Poorly implemented or ineffective internal
Risk: Is introduced by a weakness. What can happen as a result of the present weakness?
Examples of risks & weakness:
Weakness: Not having insurance for your car
Risk: Loss/no compensation in case of theft or accident
221141191
Unit 1: Lesson 7