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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:Read the following statements about internal controls. Write down the number
of each statement and whether the statement is true or false. If a statement is
false, explain why.
the
hysical stockta
1. Internal controls are not required when payments are made by cheque.
2. All payments should be made by cheque, except for petty cash payments.
A good internal control procedure is where the same person is responsible
ed with the
e reported
for paying all accounts, writing all cheques and signing all cheques.
4. In order to be efficient, all employees should have direct access to
3.
and loss.
petty cash.
Bank reconciliation statements need only be drawn up every six months.
1)
diately.
7. A blank cheque can be signed to replenish the petty cash fund if it is
handed to the custodian.
5.
6. Cheque books should be kept in a locked safe as a preventive control.
9. Separation of duties is a vital part of internal control procedures.
10. Any employee of a business should be able to buy assets for the business.
11. Keeping personnel files in a locked filing cabinet is a corrective control.
12 To save time, the employer should ask the wage earners to keep a record of
the time worked during the week and then pay them accordingly.be
1.
8 All cash receipts should be stored in the cash register and deposited at the
end of the week, in order to make fewer trips to the bank.
14. Reconciling the cash journals with the bank statement may be classified as a
detective control.
13.If there is not enough money in petty cash, the custodian should take
money from the cash register.
15. The same employee should be in charge of receiving cash and paying cash.
and
pensive item
hese item
Expert Solution
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- Which of the following are important elements of a cash disbursement control system? Note: Select all that apply. Check All That Apply All expenditures are authorized before a check is prepared. Checks are signed only by authorized Individuals. The bank-generated deposit slip should be compared with the check listing. The person opening the mall is not the person who maintains the accounting records. Unauthorized payments are prevented.arrow_forwardThe primary form of prevention for most types of cash theft is: a. Creating checks and balances for handling the deposit b. Separation of duties in the receipt of cash c. The daily comparison of the receipted deposit slips to the organization’s records d. Vertical ratio analysis of sales accountsarrow_forwardWhich of the following reflects a weak internal control system? Oa. All employees must take their vacations. Ob. A single employee is responsible for collecting and recording cash. Oc. A single employee is responsible for comparing a receiving report to an invoice. Od. All employees are well supervised.arrow_forward
- What types of controls should be in place to make sure people in the office don't just take from petty cash (for their own personal use) whenever they feel like it? In your opinion, what is an appropriate amount to have in petty cash?arrow_forwardWhich of the following statements are true regarding the control of cash receipts and cash payments? One key to controlling cash payments is to require that no expenditures be made by check; instead, all expenditures should be made from petty cash.arrow_forwardWhich 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 dutiesarrow_forward
- A lockbox plan is a. used to speed up the collection of checks received. b. used to protect cash, i.e., to keep it from being stolen. c. used primarily by firms where currency is used frequently in transactions, such as fast food restaurants, and less frequently by firms that receive payments as checks. d. used to identify inventory safety stocks. e. used to slow down the collection of checks our firm writes.arrow_forwardWhich 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.arrow_forwardWhich 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.arrow_forward
- 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?arrow_forwardIn 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.arrow_forwardWhat are the three different types of Check Fraud.What steps could you take to protect your customer and the bank from check fraud?arrow_forward
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