Internal Controls Module 4 Assignment

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Southern New Hampshire University *

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Feb 20, 2024

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Internal Controls Module 4 Assignment Lucimil Castillo-Gonzalez Southern New Hampshire University ACC 201: Financial Accounting Prof. Jacquelyn Mosely Feb 4, 2024 1
Role of Internal Controls The role of internal controls in a business it to ensure all inventory is safeguarded and accounted for when it comes to confirming what was purchased and what was sold. Having great internal controls can influence the company’s profitability and creditability. For example, if a company is public, which allows individuals to purchase shares, shareholders through income statements should be able to know profit and losses. Having an inventory system in place can demonstrate the amount of assets a company hold which prevents risks like provided false information (Warren, 2019) . If the company was not public, just having an internal control in place can prevent legal issues for business owners (Warren, 2019) . Based on the scenario for this assignment I would explain different ways to prevent the loss of product. Recommendations First recommendation I would apply to prevent the loss of inventory is securing the loading area. In the scenario, it states that the warehouse door including employee access was left open. I would first implement a control producer which in forces the roles of each employee when finishing their shift. For example, the warehouse worker before their shift should ensure that the keys are properly locked in place after closing all doors to rooms that have merchandise and merchandise information; this would help track theft if there is a log in place. Second recommendation would be to have an inventory check list in place. I would have the morning warehouse count in stock plus the delivery and report the amounts before the shift is 2
over. This will ensure that employee theft is spotted or if the vendor has provided the quantity ordered. (7-2e Warren 2019) Third recommendation I would recommend is having a supervisor in place to monitor and ensure employees are logging in the inventory properly and validating that keys and doors are locked. With a supervisor to explain and validate the amount of inventory that was recorded day by day, the owner can research when the HD TVs were missing and know if it was vendor issue or employee theft. Having different roles and responsibilities will prevent the loss of goods which in turn demonstrate the accurate revenue and assets in its appropriate financial statements. (Warren, 2019) Financial Statement If I were the business owner and I located the two $400 HD TVs I would demonstrate that the income statement and the balance sheet. I would correct by showing the decrease inventory which would decrease amount of goods sold and increase it to 800 dollars for the worth of both TVs found. In the balance sheet the total assets will decrease and then increase 800 dollars from the worth of both HD TVs. 3
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Works Cited Warren, C. S. (2019). Coporate Financial Accounting. Boston: Cengage Learning. Chapter 7. 4