7.4 The Gardner Company, a client of your firm, has come to you with the following prob- lem. It has three clerical employees who must perform the following functions: a. Maintain the general ledger b. Maintain the accounts payable ledger c. Maintain the accounts receivable ledger d. Prepare checks for signature e. Maintain the cash disbursements journal f. Issue credits on returns and allowances g. Reconcile the bank account h. Handle and deposit cash receipts Assuming equal abilities among the three employees, the company asks you to assign the eight functions to them to maximize internal control. Assume that these em- ployees will perform no accounting functions other than the ones listed.

7.4 The Gardner Company, a client of your firm, has come to you with the following prob- lem. It has three clerical employees who must perform the following functions: a. Maintain the general ledger b. Maintain the accounts payable ledger c. Maintain the accounts receivable ledger d. Prepare checks for signature e. Maintain the cash disbursements journal f. Issue credits on returns and allowances g. Reconcile the bank account h. Handle and deposit cash receipts Assuming equal abilities among the three employees, the company asks you to assign the eight functions to them to maximize internal control. Assume that these em- ployees will perform no accounting functions other than the ones listed.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Bank Reconciliation Statement

As a commerce student, we all know that every business has to maintain a cash book to maintain all his cash and bank transactions. A cash book is a book which has two columns, one cash column and one bank column.

Question

7.4
The Gardner Company, a client of your firm, has come to you with the following prob-
lem. It has three clerical employees who must perform the following functions:
a. Maintain the general ledger
b. Maintain the accounts payable ledger
c. Maintain the accounts receivable ledger
d. Prepare checks for signature
e. Maintain the cash disbursements journal
f. Issue credits on returns and allowances
g. Reconcile the bank account
h. Handle and deposit cash receipts
Assuming equal abilities among the three employees, the company asks you to
assign the eight functions to them to maximize internal control. Assume that these em-
ployees will perform no accounting functions other than the ones listed.
CHAPTER 7
CONTROL AND ACCOUNTING INFORMATION SYSTEMS
227
REQUIRED
a. List four possible unsatisfactory pairings of the functions.
b. State how you would distribute the functions among the three employees. Assume
that with the exception of the nominal jobs of the bank reconciliation and the issu-
ance of credits on returns and allowances, all functions require an equal amount of
time. (CPA Examination, adapted)
During
digoouored th

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