College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
expand_more
expand_more
format_list_bulleted
Question
Chapter 7A, Problem 4SPB
1.
To determine
Suggest a control to prevent it from happening for the misstatement, if a bill from a supplier was paid for goods that had not been ordered.
2.
To determine
Suggest a control to prevent it from happening for the misstatement, if a supplier’s bill for 50 boxes of materials was paid even through only 40 boxes were received.
3.
To determine
Suggest a control to prevent it from happening for the misstatement, if a expensive product components were stolen by an employee from a loading dock area after hours.
4.
To determine
Suggest a control to prevent it from happening for the misstatement, if no bill was sent to a customer for a shipment because the shipping document was lost after the shipment was made.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
What internal control procedure(s) would provide protection against the following threats?
a. Theft of goods by the shipping dock workers, who claim that the inventory shortages reflect errors in the inventory records.b. Posting the sales amount to the wrong customer account because a customer account number was incorrectly keyed into the system
.c. Making a credit sale to a customer who is already four months behind in making payments on his account.
d. Authorizing a credit memo for a sales return when the goods were never actually returned.
e. Writing off a customer’s accounts receivable balance as uncollectible to conceal the theft of subsequent cash payments from that customer.
f. Billing customers for the quantity ordered when the quantity shipped was actually less due to back ordering of some items
.g. Lost sales because of stockouts of several products for which the computer records indicated there was adequate quantity on hand.
h. A sales clerk sold a $7,000 wide-screen TV…
9-22 The following misstatements are included in the accounting records of the Jasmine Manufacturing Company:1. Several key-entry mistakes resulted in the exclusion of three invoices.2. A customer complained of having received a bill that had been paid in the past. He produced a receipt, but there was no record of the payment in the books.3. A shipment to a customer was not billed because the bill of lading was lost.4. Merchandise was shipped to a customer but no bill of lading was prepared. Because billings are prepared from bills of lading, the customer was not billed.5. Commercial and residential customers are not differentiated on bills of lading.6. Sales generated through the company’s Web site are recorded when customers place orders online.7. A shipment of goods was recorded as paid at the end of the year but was recorded as unpaid at the beginning of the next year.8. Several invoices were lost when the office moved to a new location.Requireda. Identify whether each misstatement…
The following misstatements are included in theaccounting records of the Joyce Manufacturing Company:1. A sales invoice was miscalculated by $1,000 as a result of a key-entry mistake.2. Cash paid on accounts receivable that had been prelisted by a secretary was stolenby the bookkeeper who records cash receipts and accounts receivable. He failed torecord the transactions.3. A material sale was recorded on the last day of the year even though the goods werenot shipped until 3 days later.4. Merchandise was shipped to a customer, but no bill of lading was prepared. Becausebillings are prepared from bills of lading, the customer was not billed.5. The controller approved a payment to a consulting firm owned by his sister. Theconsulting firm did not actually perform any services for the company.6. The shipping clerk included several additional valuable items to a shipment that werenot included in the customer’s order and were not invoiced to the customer. Theshipping clerk has an arrangement…
Chapter 7A Solutions
College Accounting, Chapters 1-27
Knowledge Booster
Similar questions
- 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.arrow_forwardCurtis, a maintenance supervisor, submitted maintenance invoices from a phony repair company and received the checks at a post office box. This should have been prevented bya. Comparison of the company name to the approved vendor list by the check signer.b. Recognition of the excess maintenance costs by Curtis’s supervisor.c. Refusal by the purchasing department to approve the vendor.d. All of the above.arrow_forwardThe following misstatements are included in the accounting records of the Dillon Manufacturing Company: Cash paid on accounts receivable was stolen by the mail clerk when the mail was opened. A sales invoice was miscalculated by $1,000 as a result of a key-entry mistake. Cash paid on accounts receivable that had been prelisted by a secretary was stolen by the bookkeeper, who records cash receipts and accounts receivable. He failed to record the transactions. A material sale was recorded on the last day of the year even though the goods were not shipped until three days later. Merchandise was shipped to a customer, but no bill of lading was prepared. Because billings are prepared from bills of lading, the customer was not billed. The controller approved a payment to a consulting firm owned by his sister. The consulting firm did not actually perform any services for the company. The shipping clerk included several additional valuable items in a shipment that were not…arrow_forward
- Which situation indicates a weak internal control structure?a. the AR clerk authorizes the write off of bad debtsb. the record-keeping clerk maintains both AR and AP subsidiary ledgersc. the inventory control clerk authorizes inventory purchasesd. the AR clerk prepares customer statements every montharrow_forwardConsider the following misstatements that have occurred in Ana Accessories, a trading company selling bags 1. A purchase clerk regularly orders bags for personal use. These orders always cost less than $3,000. The company requires authorization only for purchase orders above $3,000.2. The warehouse department checks the quality of a shipment it receives and verifies its quantity against the supplier’s dispatch note. However, they do not verify this against the purchase order as it was never sent to them. The shipment included three batches of handbags that the company did not order but paid for.3. There is no application control over recording invoices.4. The purchase ledger clerk, who records invoices daily, makes several mistakes recording them. As a result, suppliers are paid incorrectly.5. The finance director only approves the total amount of payments to be made from a list of payees, some of whom are fictitious.6. The sales ledger clerk takes a vacation during Christmas. Upon…arrow_forwardThe following misstatements are included in the accounting records of Westgate Manufacturing Company.1. Each month, a fraudulent receiving report is submitted to accounting by anemployee in the receiving department. A few days later, he sends Westgate an invoicefor the quantity of goods ordered from a small company he owns and operates inthe evening. A check is prepared, and the amount is paid when the receiving reportand the vendor’s invoice are matched by the accounts payable clerk.2. Telephone expense (account 2112) was unintentionally charged to repairs andmaintenance (account 2121).3. The accounts payable clerk prepares a monthly check to Story Supply Company forthe amount of an invoice owed and submits the unsigned check to the treasurer forpayment along with related supporting documents that have already been approved.When she receives the signed check from the treasurer, she records it as a debit toaccounts payable and deposits the check in a personal bank account for a…arrow_forward
- 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.arrow_forwardWhat internal control or procedure(s) would provide protection against the following threats? A production order was initiated for a product that was already overstocked in the company’s warehouse. A production employee stole items of work-in-process inventory A production employee entered a materials requisition form into the system in order to steal $300 worth of parts from the raw materials storeroom A parts storeroom clerk issued parts in quantities 10% lower than those indicated on several materials requisitions and stole the excess quantities. A production manager stole several expensive machines and covered up the loss by submitting a form to the accounting department indicating that the missing machines were obsolete and should be written off as worthless.arrow_forwardAll-Around Sound Co. discovered a fraud whereby one of its front office administrative employees used company funds to purchase goods such as computers, digital cameras, and other electronic items for her own use. The fraud was discovered when employees noticed an increase in the frequency of deliveries from vendors and the use of unusual vendors. After some investigation, it was discovered that the employee would alter thedescription or change the quantity on an invoice in order to explain the cost on the bill.What general internal control weaknesses contributed to this fraud?arrow_forward
- Which, if any, of the following situations represent improper segregation of functions?a. The billing department prepares the customers’ invoices, and the accounts receivable department posts to the customers’ accounts.b. The sales department approves sales credit memos as the result of product returns, and subsequent adjustments to the customer accounts are performed by the accounts receivable department.c. The shipping department ships goods that have been retrieved from stock by warehouse personnel.d. The general accounting department posts to the general ledger accounts after receiving journal vouchers that are prepared by the billing department.arrow_forwardThe following misstatements are included in the accounting records of Westgate Manufacturing Company. Each month, a fraudulent receiving report is submitted to accounting by an employee in the receiving department. A few days later, he sends Westgate an invoice for the quantity of goods ordered from a small company he owns and operates in the evening. A check is prepared, and the amount is paid when the receiving report and the vendor’s invoice are matched by the accounts payable clerk. Telephone expense (account 2112) was unintentionally charged to repairs and maintenance (account 2121). Required: For each misstatement, identify the transaction-related audit objective that was not met. For each misstatement, state a control that should have prevented it from occurring on a continuing basis. For each misstatement, state a substantive audit procedure that could uncover it.arrow_forwardWhich, if any, of the following situations represent improper segregation of functions?A. The billing department prepares the customers ‘invoices, and the AR department posts to thecustomers’ accounts.B The sales department approves sales credit memos as the result of product returns, and subsequentadjustments to the customer accounts are performed by the AR department.C The shipping department ships goods that have been retrieved from stock by warehouse personnel.D. The general accounting department posts to the general ledger accounts after receiving journalvouchers that are prepared by the billing department.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning