1. The company does not use electronic time clocks because it fears it will hurt employee morale. 2. An employee cannot approve their own request for purchases of inventory. B. Several salesclerks share the same cash drawer. 4. Employees that handle easily transferable assets such as cash are bonded. 5. The company does not allow employees with access to cash to modify accounting records.

1. The company does not use electronic time clocks because it fears it will hurt employee morale. 2. An employee cannot approve their own request for purchases of inventory. B. Several salesclerks share the same cash drawer. 4. Employees that handle easily transferable assets such as cash are bonded. 5. The company does not allow employees with access to cash to modify accounting records.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter8: Fraud, Internal Controls, And Cash

Section: Chapter Questions

Problem 5MC: There are several elements to internal controls. Which of the following would not address the issue...

See similar textbooks

Similar questions

There are several elements to internal controls. Which of the following would not address the issue of having cash transactions reported in the accounting records? A. One employee would have access to the cash register. B. The cash drawer should be closed out, and cash and the sales register should be reconciled on a prenumbered form. C. Ask customers to report to a manager if they do not receive a sales receipt or invoice. D. The person behind the cash register should also be responsible for making price adjustments.
Authorization of transactions is a key control in most organizations. Authorizations should not be made by individuals who have incompatible functions. For each transaction (listed as A through I), indicate the individual or function (e.g., the head of a particular department) that should have the ability to authorize that transaction. Briefly provide a rationale for your answer. a. Writing off old accounts receivable. B. Committing the organization to acquire another company that is half the size of the existing company. C. Paying an employee for overtime. D. Shipping goods on account to a new customer. E. Purchasing goods from a new vendor. F. Temporarily investing funds in common stock investments instead of money market funds. G. Purchasing a new line of manufacturing equipment to remodel a production line at one of the company’s major divisions (the purchase represents a major new investment for the organization). H. Replacing an older machine at one of the company’s major divisions. I. Rewriting the company’s major computer program for processing purchase orders and accounts payable (the cost of rewriting the program will represent one quarter of the organization’s computer development budget for the year).
Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control principle violated or followed for each procedure. 1. The company does not use electronic time clocks because it fears it will hurt employee morale. 2. An employee cannot approve their own request for purchases of inventory. 3. Several salesclerks share the same cash drawer. 4. Employees that handle easily transferable assets such as cash are bonded. 5. The company does not allow employees with access to cash to modify accounting records. Weakness or Strength Internal Control Principle 1. 2. 3. 4. 5.
Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control principle violated or followed for each procedure. 1. The same employee requests, records, and makes payment for purchases of inventory. 2. The company saves money by having employees involved in operations perform the only review of internal controls. 3. Time is saved by not updating records for use of supplies. 4. The recordkeeper is not allowed to write checks or initiate EFTs. 5. Each salesclerk is in charge of her own cash drawer.
Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control violated or followed for each procedure. 1. The owner does not use ID scanners to limit access to expensive merchandise. Instead, the owner argues they hire honest employees. 2. Several salesclerks share the same cash drawer. 3. The company devotes resources towards keeping accurate accounting records for machinery. 4. The company does not allow employees with access to cash to modify accounting records. 5. Employees that handle easily transferable assets such as cash are bonded. Weakness or Strength 1. Weakness 2. Weakness 3. Strength 4. Strength 5. Strength Internal Control Principle
Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control violated or followed for each procedure. 1. The owner does not use ID scanners to limit access to expensive merchandise. Instead, the owner argues they hire honest employees. 2. Several salesclerks share the same cash drawer. 3. The company devotes resources towards keeping accurate accounting records for machinery. 4. The company does not allow employees with access to cash to modify accounting records. 5. Employees that handle easily transferable assets such as cash are bonded. Weakness or Strength 1. Weakness 2. Weakness 3. Strength 4. Strength 5. Strength Internal Control Principle Apply technological controls Establish responsibilities Maintain adequate records Separate recordkeeping from custody of assets Insure assets and bond key employees
Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control violated or followed for each procedure. The company does not use electronic time clocks because it fears it will hurt employee morale. The same employee requests, records, and makes payment for purchases of inventory. Several salesclerks share the same cash drawer. Employees that handle easily transferable assets such as cash are bonded. The company devotes resources towards keeping accurate accounting records for machinery
Which of the following is an example of poor internal control in an organization?a. The company rotates employees through various jobs.b. The accounting department compares goods received with the related purchase order.c. The mailroom clerk records daily cash receipts in the journal.d. Employees must take vacations.
Identify the fraud triangle risk factor (Opportunity, Pressure, or Rationalization) in each situation. 1. The business has no cameras or security devices at its warehouse. 2. A worker sees other employees regularly take inventory for personal use. 3. Payroll manager feels she is greatly underpaid. 4. No one matches the cash in the register to receipts when shifts end. 5. Managers are expected to grow business or be fired. 6. Managers are told to make extreme cuts in expenses. Opportunity Rationalization Pressure Opportunity Pressure Pressure
Which of the following reflects a weak internal control system? Please explain with full explanation. a. All employees are well supervised. b. A single employee is responsible for comparing a receiving report to an invoice. c. All employees must take their vacations. d. A single employee is responsible for collecting and recording cash.
Which of the following reflects a weak internal control system? Oa. All employees are well supervised. b. A single employee is responsible for comparing a receiving report to an invoice. C. All employees must take their vacations. )d. A single employee is responsible for collecting and recording cash.
The following control procedures are used in Keaton Company for over-the-counter cash receipts.(a) For each procedure, explain the weakness in internal control and identify the control principle that is violated. Procedure Weakness Principle Violated 1. Each store manager is responsible for interviewing applicants for cashier jobs. They are hired if they seem honest and trustworthy. Select a weakness in internal control Cashiers are not bonded and background checks are not conductedCash is not adequately protected from theftInability to establish responsibility for cash on a specific clerkCash is not independently countedThe accountant should not handle cash Select a control principle that is violated Establishment of responsibilityHuman resource controlsSegregation of dutiesPhysical controlsDocumentation proceduresIndependent internal verification…