Identify the principle of internal control to each of the following cases.1.Cash is locked in a safe overnight.2.Employees who receive shipments of goods do not have access to the accounting records for merchandise.3.Shipping documents are pre-numbered.4.The bookkeeper does not have physical custody of assets.5.Only the treasurer of the company can sign checks.

Cash is locked in a safe overnight. - Safeguarding of Assets This control measure protects the…

Answered: Identify the principle of internal…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following are deficiencies in internal controls over cash. a. When the cashier isn't available, Amy prepares both the deposit and opens the mail. b. The mail clerk may not prepare remittance advice for the A/R department if a customer does not submit a one with payment. c. Sometimes, the treasurer's department does not stop the supporting documents for cash disbursements. d. John handles both the customer correspondence concerning monthly statements and making the bank deposits. e. Mike handles incoming mail and also prepares bank reconciliations; however, the bank reconciliations are not done in a timely manner. For each deficiency: Determine what applicable audit procedure(s) should be conducted to identify whether any material misstatements exist Explain why you think this procedure is best for this situation. Consider each deficiency independently of the others. While each deficiency presents potential issues, identify two that stand out as the worse with your professional…
Which internal control activity is being violated when the cashier in a retail store also records the daily receipts in a journal? adequate documents and records safeguards over assets and records independent checks on recorded amounts segregation of duties
Which of the following is not a reason why paying by check is an important internal control? A. The check must be signed by an authorized official. B. The check provides a record of the payment. ○ C. Before signing the check, the purchasing agent reviews the invoice or other evidence supporting the payment. OD. All of the above statements are correct.
An accounting manager, who has full access to a Company’s accounting system also has access to the bank account and is able to send cash payments without supervision. What is an internal control that should be implemented to reduce the risk of theft or fraud in this company?
In testing controls over cash disbursements, an auditor most likely would determine that the person who signs the check also: A. Approves the voucher for payment. C B. C. D. Stamps, perforates or otherwise cancels supporting documents. Returns the checks to accounts payable. Is denied access to the supporting documents.
Which of the following is true of a petty cash voucher? a.It must be issued once in a month by a bank. b.It must explain the purpose of the payment. c.It must only be used to account for payments of more than $5. d.It must be signed only by the person who authorized the payment.
Good internal controls include upon receiving checks from customers by mail, a responsible employee should A. Add the checks to the daily cash summary B. Verify that check is supported by prenumbered sales invoices C. Prepare a duplicate listing of checks received D. Record the checks in the cash receipts journal
To enhance internal control in the bank reconciliation process, the bank reconciliation should be prepared O a. with the assistance of the bank's employees. O b. by the supervisor. O c. entirely within the computerized accounting system. O d. by an employee who does not take part in or record cash transactions.
Access controls prevent and detect unauthorized and illegal access to the firm's assets. The physical assets at risk in the revenue cycle are inventories and cash. Limiting access to these items would NOT include: A) Locking cash drawers and safes in the cash receipts department B) Making the mail room responsible for opening and recording cash and cheques received from clients C) Warehouse security, such as fences, alarms, and guards D) Using a safe or night deposit box for cash
Review the following statements regarding a petty cash fund used in a business. Select the one that is correct. O A petty cash fund is controlled by top management. O The cashier of a fund will write checks for small payments like postage, supplies and deliveries, O Only the petty cashier is responsible for paying cash from the fund. OA check written against the fund is cashed when the fund is replenished.
Some strategies in management can use to implement controls to ensure the integrity and existence of the client's cash balances. Reconciling cash can be a great control in most cases since receipts tie to deposits so it's accurate and cash exists since it hits the bank account. Now reconciling on a daily basis is important as well but would you be able to negotiate the cash box if the employee was using a lapping fraud to steal money? If they took $100 of cash and issued a manual receipt to the customer then used the next $100 to come in to clear the AR from the first customer on the cash receipt system, wouldn't I still reconcile? What could I do as a manager to prevent this type of fraud from occurring?
Match each of the following cash payment activities to the internal control principle to which itbest relates. Enter the appropriate letter in the space provided.1. The business manager has the only key to thecheck-signing equipment.2. The purchasing manager orders all goods andservices for the business.3. A bank reconciliation is prepared monthly.4. Prenumbered checks are used for all payments.5. The company asks suppliers to deliver their merchandise to the warehouse but mail their invoicesto the accounting department.A. Establish responsibilityB. Segregate dutiesC. Restrict accessD. Document proceduresE. Independently verify

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