Required: Which internal control(s) would you recommend to prevent the following situations from occurring? Situation a. Authorization of a credit memo for a customer's account (on receivables) when the goods were never actually returned. b. Theft of funds by the cashier, who cashed several checks and did not record their receipt. c. Inventory stolen by receiving dock personnel. The receiving clerk claimed the inventory was sent to the warehouse, but the warehouse clerk did not record properly. d. Writing off a customer's accounts receivable balances as uncollectible in order to conceal the theft of subsequent cash collections. e. Billing customers for the quantity ordered when the quantity shipped was actually less due to back- ordering of some items. Answer
Required: Which internal control(s) would you recommend to prevent the following situations from occurring? Situation a. Authorization of a credit memo for a customer's account (on receivables) when the goods were never actually returned. b. Theft of funds by the cashier, who cashed several checks and did not record their receipt. c. Inventory stolen by receiving dock personnel. The receiving clerk claimed the inventory was sent to the warehouse, but the warehouse clerk did not record properly. d. Writing off a customer's accounts receivable balances as uncollectible in order to conceal the theft of subsequent cash collections. e. Billing customers for the quantity ordered when the quantity shipped was actually less due to back- ordering of some items. Answer
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...
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Question
Transcribed Image Text:Required:
Which internal control(s) would you recommend to prevent the following situations from occurring?
Situation
a. Authorization of a credit memo for a customer's account (on receivables) when the goods were never
actually returned.
b. Theft of funds by the cashier, who cashed several checks and did not record their receipt.
c. Inventory stolen by receiving dock personnel. The receiving clerk claimed the inventory was sent to the
warehouse, but the warehouse clerk did not record properly.
d. Writing off a customer's accounts receivable balances as uncollectible in order to conceal the theft of
subsequent cash collections.
e. Billing customers for the quantity ordered when the quantity shipped was actually less due to back-
ordering of some items.
Answer
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