Horngren's Accounting (12th Edition)
Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
Textbook Question
Book Icon
Chapter 9, Problem 1QC

1. With good internal controls, the person who handles cash can also

    Learning Objective 1

  1. account for cash payments.
  2. account for cash receipts from customers.
  3. issue credits to customers for sales returns.
  4. None of the above

Expert Solution & Answer
Check Mark
To determine

Internal Control: Internal controls are just approaches or methods set up to defend a benefit, give solid budgetary data, advance productive and successful operations, and guarantee strategy consistence. For instance: When you came to work toward the beginning of today did you bolt the ways to your home? Provided that this is true, that is a case of an "internal control" you used to ensure the advantages you claim.

What other work can a person handling cash can do if the organization has good internal controls.

Explanation of Solution

Solution: option d

Good internal controls mean that the organization is working efficiently and effectively by adhering to the company policies and procedures. It also ensures that proper controls are in place to ensure that no task is distributed to counter or to affect the independence and integrity of work performed by one person.

Definition of internal control contains the following parts:

a. Safeguarding of assets

b. Encourage employees to follow company policies.

c. Promote Operational efficiencies

d. Compliance with applicable laws and regulations.

Explanations:

If a person is handling cash a good internal control requires that proper separation of duties should be in place to ensure a single person should not have the total control over the entire cash process.

Given options can be analyzed as follows:

  1. A person handling the cash should not account for cash payment as it is a part of an effective internal control and comes under separation of duties.
  2. If the person handling the cash accounts for cash receipts then there may be chances that the cashier my enter wrong amounts in accounts making the internal control process inefficient, hence this option is also incorrect.
  3. Issuing credits to customer for sales returns also is a responsibility which need to be segregated from the person handling the responsibility of cash this option is incorrect.
  4. None of the above is a right choice as none of the option is correct.
Conclusion

From the above analysis, we can conclude that all the responsibilities will make the internal controls weak hence its not advisable to so any of the given task hence option d is correct.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
01:14
Students have asked these similar questions
What are the step(s) when using the Sales with Payment customer workflow?   A. Create sales receipts deposited to the Undeposited Funds account > Create Bank Deposit B. Create Sales Receipt deposited to the checking account C. Create Bank Deposit D. Create Invoice > Receive Payment deposited to the Undeposited Funds account > Create Bank Deposit
Knowledge 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.
As part of a strong internal control system, which of the following accounting duties needsto be separated from cash handling?a. Record keepingb. Filingc. Transaction approvald. Both a and c need to be separated from cash handling.

Chapter 9 Solutions

Horngren's Accounting (12th Edition)

Ch. 9 - What is the difference between accounts receivable...Ch. 9 - List some common examples of other receivables,...Ch. 9 - Prob. 3RQCh. 9 - When dealing with receivables, give an example of...Ch. 9 - What type of account must the sum of all...Ch. 9 - Prob. 6RQCh. 9 - What occurs when a business factors its...Ch. 9 - What occurs when a business pledges its...Ch. 9 - What is the expense account associated with the...Ch. 9 - When is bad debts expense recorded when using the...Ch. 9 - What are some limitations of using the direct...Ch. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - When using the allowance method, what account is...Ch. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - How do the percent-of-receivables and...Ch. 9 - What is the difference between the...Ch. 9 - In accounting for bad debts, how do the income...Ch. 9 - What is the formula to compute interest on a note...Ch. 9 - Prob. 21RQCh. 9 - Prob. 22RQCh. 9 - Prob. 23RQCh. 9 - Prob. 24RQCh. 9 - Prob. S9.1SECh. 9 - Recording credit sales and collections Learning...Ch. 9 - Applying the direct write-off method to account...Ch. 9 - Collecting a receivable previously written...Ch. 9 - Applying the allowance method to account for...Ch. 9 - Applying the allowance method (percent-of-sales)...Ch. 9 - Applying the allowance method...Ch. 9 - Applying the allowance method...Ch. 9 - Computing interest amounts on notes receivable...Ch. 9 - Accounting for a note receivable Learning...Ch. 9 - Accruing interest revenue and recording collection...Ch. 9 - Recording a dishonored note receivable Learning...Ch. 9 - Prob. S9.13SECh. 9 - Defining common receivables terms Learning...Ch. 9 - E9-15 Identifying and correcting internal control...Ch. 9 - Recording credit sales and collections Learning...Ch. 9 - Journalizing transactions using the direct...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Prob. E9.21ECh. 9 - Journalizing credit sales, note receivable...Ch. 9 - Journalizing note receivable transactions...Ch. 9 - Journalizing note receivable transactions Learning...Ch. 9 - Journalizing note receivable transactions Learning...Ch. 9 - Evaluating ratio data Learning Objective 5 Abanaki...Ch. 9 - Computing the collection period for receivables...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Prob. P9.31APGACh. 9 - Accounting for notes receivable and accruing...Ch. 9 - Prob. P9.33APGACh. 9 - Using ratio data to evaluate a company’s financial...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Prob. P9.37BPGBCh. 9 - Prob. P9.38BPGBCh. 9 - Prob. P9.39BPGBCh. 9 - Accounting for notes receivable, dishonored notes,...Ch. 9 - Using ratio data to evaluate a company’s financial...Ch. 9 - Prob. P9.42CTCh. 9 - Prob. P9.43CPCh. 9 - Prob. P9.44PSCh. 9 - Prob. 9.1TIATCCh. 9 - Decision Case 9-1 Weddings on Demand sells on...Ch. 9 - Decision Case 9-2 Pauline’s Pottery has always...Ch. 9 - Prob. 9.1FCCh. 9 - Financial Statement Case 9-1 Use Target...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
Text book image
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Text book image
Personal Finance
Finance
ISBN:9781337669214
Author:GARMAN
Publisher:Cengage
Text book image
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Text book image
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Text book image
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,