Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Question
Chapter 6, Problem 8SE
To determine
Indicate the control activities applied to each of the given policies/procedures.
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Students have asked these similar questions
Answer the following questions about the controls in bank accounts:
Understanding bank account controls
ver the following questions about the controls in bank
Learning Objective 6
accounts:
Requirements
1. Which bank control protects against forgery?
Vlhich bank control reports the activity in the customer's account each period?
Which bank control confirms the amount of money put into the bank account?
Below are descriptions of internal control problems. In the space to the left of each item, enter the code letter of th
best internal control principle that is related to the problem described.
Internal Control Principles
A. Establishment of responsibility
B. Segregation of duties
C. Physical control devices
D. Documentation procedures
E.
Independent internal verification
F.
Human resource controls
1.The same person opens incoming mail and records the cash receipts.
2. Three people handle cash sales from the same cash register drawer.
3. A clothing store is experiencing a high level of inventory shortages because people try on clothing and walk out o
the store without paying for the merchandise.
4. The person who is authorized to sign checks approves purchase orders for payment
5. Some cash payments are not recorded because checks are not pre-numbered.
6. Cash shortages are not discovered because there are no daily cash counts by supervisors.
7. The treasurer of the company has not…
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
Chapter 6 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 6 - Prob. 1DQCh. 6 - Prob. 2DQCh. 6 - Prob. 3DQCh. 6 - Prob. 4DQCh. 6 - Prob. 5DQCh. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Prob. 8DQCh. 6 - Prob. 9DQCh. 6 - Prob. 10DQ
Ch. 6 - Prob. 1SCCh. 6 - Prob. 2SCCh. 6 - Prob. 3SCCh. 6 - Prob. 4SCCh. 6 - Separation of duties refers to separating all of...Ch. 6 - Which of the following is not a control activity?...Ch. 6 - Prob. 7SCCh. 6 - Prob. 8SCCh. 6 - Internal auditors focus on _________ ; external...Ch. 6 - Prob. 10SCCh. 6 - Prob. 11SCCh. 6 - Prob. 12SCCh. 6 - Prob. 1SECh. 6 - Fraud triangle (Learning Objective 3) 5-10 min....Ch. 6 - Prob. 3SECh. 6 - Internal controls (Learning Objective 2) 5-10 min....Ch. 6 - Prob. 5SECh. 6 - Prob. 6SECh. 6 - Prob. 7SECh. 6 - Prob. 8SECh. 6 - Prob. 9SECh. 6 - Prob. 10SECh. 6 - Prob. 11SECh. 6 - Accounting terminology (Learning Objectives 1 4)...Ch. 6 - Prob. 13SECh. 6 - Prob. 14SECh. 6 - Prob. 1CFSAPCh. 6 - Prob. 1EIACh. 6 - Prob. 2EIACh. 6 - Prob. 3EIACh. 6 - Prob. 4EIACh. 6 - Prob. 5EIACh. 6 - Prob. 6EIACh. 6 - Case 7. Kelly Straton, a trusted employee of...Ch. 6 - Prob. 8EIACh. 6 - Prob. 1FACh. 6 - Industry Analysis Purpose: To help you understand...Ch. 6 - Prob. 1SBACh. 6 - Prob. 1WC
Knowledge Booster
Similar questions
- Andy is a junior accounts clerk. Andy has the responsibility of keying transactions into the accounting information system. Andy also has the authorization and sanctions to post those journal entries into the ledger. Required: Identify the risk(s) in the situation and assess what and how controls can be deployed to this situation.arrow_forwardWhich of the following is an example of detective controls? a. The company should establish formal guidelines to handle cash receipts and make purchases. b. Important documents should be kept in a safe place, and electronic files should be backed up regularly. c. Employees should be made aware of the company’s internal control policies. d. Management periodically determines whether the amount of physical assets agree with the accounting records.arrow_forwardCase Study A Scenario A major retailer asked the IS auditor to review their readiness for complying with credit card company requirements for protecting cardholder information. The IS auditor subsequently learned the following information. The retailer uses wireless point-of-sale registers that connect to application servers located at each store. These registers use wired equivalent protection (WEP) encryption. The application server, usually located in the middle of the store’s customer service area, forwards all sales data over a frame relay network to database servers located at the retailer’s corporate headquarters, and using strong encryption over an Internet virtual private network (VPN) to the credit card processor for approval of the sale. Corporate databases are located on a protected screened subset of the corporate local area network. Additionally, weekly aggregate sales data by product line is copied from the corporate databases to magnetic media and mailed to a…arrow_forward
- Janice Dodds opens the mail for Ajax Plumbing Company. She lists all customer checks on a spreadsheet that includes the name of the customer and the check amount. The checks, along with the spreadsheet, are then sent to Jim Seymour in the accounting department, who records the checks and deposits them daily in the company’s checking account. Required: Describe how the company could improve its internal control procedure for the handling of its cash receipts.arrow_forwardAndy is a junior accounts clerk. Andy has the responsibility of keying transactions into the accounting information system. Andy also has the authorization and sanctions to post those journal entries into the ledger. Identify the risk(s) in the situation and assess what and how controls can be deployed to this situation.arrow_forwardDetermine 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.arrow_forward
- 6.1 Classify each of the following controls as preventative, detective, or corrective. 6.1.1 Implementation of segregation of duties. 6.1.2 The use of pre-numbered sales invoices. 6.1.3 Security guards are assigned to all entrances and exits of the company building. 6.1.4 The performance of personnel performance reviews every six months. 6.1.5 The preparation of a debtor’s reconciliation. 6.1.6 The issue of internal audit reports on the sales department audit. 6.1.7 Frequent reviews of the log of amendments to the employee masterfile. 6.1.8 All new employees must write a computer literacy test.arrow_forwardKnowledge Check 01 Identify the type of activity by choosing the best answer for each question. Select each item listed below as being an identifying, recording, or a communicating activity. Items Preparing and entering a list of checks issued. Using a cash register to enter sales. Entering a list of the sales invoices, including the prices and quantities, for the company's recordke Interpreting information from financial reports. Preparing financial statements for creditors.arrow_forwardEvaluating internal control over cash receipts Dogtopia sells pet supplies and food and handles all sales with a cash register. The cash register displays the amount of the sale. It also shows the cash received and any change returned to the customer. The register also produces a customer receipt but keeps no internal record of the transactions. At the end of the day, the clerk counts the cash in the register and gives it to the cashier for deposit in the company bank account. Requirements 1. Identify the internal control weakness over cash receipts. 2. What could you do to correct the weakness?arrow_forward
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