Accounting Information Systems
11th Edition
ISBN: 9781337552127
Author: Ulric J. Gelinas, Richard B. Dull, Patrick Wheeler, Mary Callahan Hill
Publisher: Cengage Learning
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Question
Chapter 8, Problem 5P
Summary Introduction
To determine: The person who is responsible for the given option.
Introduction:
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Upon receipt of customers’ checks in the mail room, a responsible employee should prepare a remittance list that is forwarded to the cashier. A copy of the list should be sent to thea. Internal auditor to investigate the list for unusual transactions.b. Treasurer to compare the list with the monthly bank statement.c. Accounts receivable bookkeeper to update the subsidiary accounts receivable records.d. Entity’s bank to compare the list with the cashier’s deposit slip.
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
Upon receipt of the documents from accounts payable department, the cash disbursements clerk files the documents until their payment due date. On the due date, the clerk prepares a cheque for the invoiced amount, which is sent to the treasurer who signs it and mails back to the supplier. The cash disbursement clerk then updates the cheque register, accounts payable ledger, and accounts payable control account from the clerk’s terminal. Finally, the clerk files the invoice and copy of purchase order, receiving report, cheque in the department.
Required: Describe the internal control weakness in Two Symbols’ cash disbursements system and discuss the risk associated with the weakness.
Chapter 8 Solutions
Accounting Information Systems
Ch. 8 - What are the four major categories of pervasive...Ch. 8 - What are the differences among a pervasive control...Ch. 8 - Prob. 3RQCh. 8 - Describe some compensating controls that can be...Ch. 8 - What are policy controls plans? How do policies...Ch. 8 - Why should an organization conduct monitoring...Ch. 8 - Prob. 8RQCh. 8 - Prob. 10RQCh. 8 - What are the major elements of the strategic IT...Ch. 8 - Prob. 12RQ
Ch. 8 - Prob. 13RQCh. 8 - What are the four stages through which a program...Ch. 8 - What steps are commonly included in a business...Ch. 8 - Prob. 16RQCh. 8 - Prob. 17RQCh. 8 - Prob. 18RQCh. 8 - Prob. 19RQCh. 8 - Prob. 20RQCh. 8 - Prob. 21RQCh. 8 - Prob. 22RQCh. 8 - Prob. 23RQCh. 8 - Prob. 24RQCh. 8 - Prob. 25RQCh. 8 - Prob. 26RQCh. 8 - Prob. 27RQCh. 8 - Prob. 28RQCh. 8 - Prob. 29RQCh. 8 - Prob. 30RQCh. 8 - Prob. 31RQCh. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - No matter how sophisticated a system of internal...Ch. 8 - Prob. 4DQCh. 8 - Prob. 5DQCh. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - Contracting for a hot site is too cost-prohibitive...Ch. 8 - Prob. 9DQCh. 8 - Prob. 10DQCh. 8 - Prob. 11DQCh. 8 - The following is a list of six control plans from...Ch. 8 - Prob. 2SPCh. 8 - Prob. 3SPCh. 8 - Prob. 2PCh. 8 - The following is a list of 13 control plans from...Ch. 8 - Prob. 4PCh. 8 - Prob. 5PCh. 8 - Prob. 6PCh. 8 - Examine the last column in Table 8.2 (p. 280) for...
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- Island Trading Co., a client of your CPA firm, has requested your advice on the following problem. It has three clerical employees who must perform the following functions: (1) Maintain general ledger. (2) Maintain accounts payable ledger. (3) Maintain accounts receivable ledger. (4) Maintain cash disbursements journal and prepare checks for signature. (5) Issue credit memos on sales returns and allowances. (6) Reconcile the bank account. (7) Handle and deposit cash receipts. Assuming that there is no problem as to the ability of any of the employees, the company requests your advice on assigning the above functions to the three employees in such a manner as to achieve the highest degree of internal control. It may be assumed that these employees will perform no other accounting functions than the ones listed and that any accounting functions not listed will be performed by persons other than these three employees. a. List four possible unsatisfactory combinations of the…arrow_forwardThe following is the description of cash disbursements system of Two Symbols Limited:Upon receipt of the documents from accounts payable department, the cash disbursements clerk files the documents until their payment due date. On the due date, the clerk prepares a cheque for the invoiced amount, which is sent to the treasurer who signs it and mails back to the supplier.The cash disbursement clerk then updates the cheque register, accounts payable ledger, and accounts payable control account from the clerk’s terminal. Finally, the clerk files the invoice and copy of purchase order, receiving report, cheque in the department.Required:Describe the internal control weakness in Two Symbols’ cash disbursements system and discuss the risk associated with the weakness.(maximum explanation) do not copy paste the words from google otherwise answer would be rejected dur to softwarearrow_forwardThe following is the description of cash disbursements system of Two Symbols Limited: Upon receipt of the documents from accounts payable department, the cash disbursements clerk files the documents until their payment due date. On the due date, the clerk prepares a cheque for the invoiced amount, which is sent to the treasurer who signs it and mails back to the supplier. The cash disbursement clerk then updates the cheque register, accounts payable ledger, and accountspayable control account from the clerk’s terminal. Finally, the clerk files the invoice and copy ofpurchase order, receiving report, cheque in the department. Required:Describe the internal control weakness in Two Symbols’ cash disbursements system and discuss therisk associated with the weakness.arrow_forward
- The following is the description of cash disbursements system of Two Symbols Limited:Upon receipt of the documents from accounts payable department, the cash disbursements clerk files the documents until their payment due date. On the due date, the clerk prepares a cheque for the invoiced amount, which is sent to the treasurer who signs it and mails back to the supplier.The cash disbursement clerk then updates the cheque register, accounts payable ledger, and accounts payable control account from the clerk’s terminal. Finally, the clerk files the invoice and copy of purchase order, receiving report, cheque in the department. Question 01 Describe the internal control weakness in Two Symbols’ cash disbursements system and discuss the risk associated with the weakness.arrow_forwardJanice 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_forward1)The credit department runs a credit check on all customers who apply for credit one in account proves uncollectible, the credit department authorizes the right off of the accounts receivable number 2) cash receipts come into the credit department which separates the cash received from the customers remittance slips. The credit department list all cash receipts by customer name and amount of cash received 3) The cash goes to the treasurer for deposit in the bank the remittance slip go to the accounting department for posting to customers. 4) The controller compares the daily deposit slip to the total amount posted to the customers account. Both amounts must agree.arrow_forward
- 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 verifyarrow_forwardMatch each of the following cash receipt activities to the internal control principle to which it bestrelates. Enter the appropriate letter in the space provided.1. A list of checks received in the mail is prepared.2. Total cash receipts are compared to the amounton the bank deposit slip.3. A password is required to open the cash register.4. Price changes at the checkout require a manager’sapproval.5. Cashiers are required to count the cash in theirregister at the beginning and end of each shift.A. Establish responsibilityB. Segregate dutiesC. Restrict accessD. Document proceduresE. Independently verifyarrow_forwardSubject: Accounting Information SystemQuestion: What would be the correct system flowchart for this given process: Accounts Payable and Cash Disbursement Process:Vendors send invoices to the AP department where they are reviewed and approved for payment. Once approved, the invoice and a cash disbursement voucher are sent to the cash disbursement department, where a check is prepared and sent to the vendor. A copy of the check, the invoice, and the voucher are returned to the AP department and filed.arrow_forward
- The following information describes part of the cash collection procedure at Ritaj Sdn. Bhd. It is a small company which processes its daily transactions Every day, for the cash collection procedure, a clerk in the Accounts Receivable Department will review the Account Receivable (AR) subsidiary ledger for the payments that are due to be received. He then prepares a cash collection letter and sends it to the cash collection department to check the outstanding amount owed by its customers from credit sales to the firm. Upon receiving the document from the account receivable department, the cash collection clerk determines the volume of credit sales and the average collection period. Both of these factors have direct relationship with the firm’s credit and collection policies. Since accounts receivable is an important link in working capital management, the establishment and implementation of these policies will have direct impact on the firm’s operation and profitability as a whole.…arrow_forwardUse the following flowchart of the cash receipts subsystem for Rockmart Manufacturing for questions 4-8. Customer checks Customer remittance advices Separate remittance advices and checks Customer remittance advices Customer checks Prepare tape Customer checks Paper tape Assemble into batches Batches of remittance advices B Customer remittance advices Paper tape Remittance advices Error listing and D summary information Daily accounts receivable run E A 4. The customer checks accompanied by the control tape (refer to symbol A) would be: a. forwarded daily to the billing department for deposit. b. taken by the mail clerk to the bank for deposit daily. c. forwarded to the treasurer for deposit daily. d. accumulated for a week and then forwarded to the treasurer for deposit weekly. [CMA adapted] 5. The appropriate description that should be placed in symbol B would be: a. keying and verifying. b. collate remittance advices. 6. The next action to take with the customer remittance advices…arrow_forwardCredit is granted by a credit department. Once shipment occurs and is recorded in the sales journal, all shipping documents are electronically marked “recorded” by the accounting staff. Sales returns are presented to a sales department clerk, who prepares a prenumbered receiving report. Cash receipts received in the mail are received by a secretary with no record-keeping responsibility. Cash receipts received in the mail are forwarded unopened with remittance advices to accounting. The cash receipts journal is prepared by the treasurer’s department. Cash is deposited weekly. Statements are sent monthly to customers. Write-offs of accounts receivable are approved by the controller. The bank reconciliation is prepared by individuals independent of cash receipts record keeping. For each of the preceding 10 items, indicate whether the item represents an internal control strength for the sales and collection cycle. internal control deficiency for the sales and collection cycle. For…arrow_forward
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