Authorization of transactions is a key control in most organizations. Authorizations should not be made by individuals who have incompatible functions. For each transaction (listed as A through I), indicate the individual or function (e.g., the head of a particular department) that should have the ability to authorize that transaction. Briefly provide a rationale for your answer. Writing off old accounts receivable. Committing the organization to acquire another company that is half the size of the existing company. Paying an employee for overtime. Shipping goods on account to a new customer. Individual(Salesperson)- The salesperson may ship the goods which can be supervised by a senior. Purchasing goods from a new vendor. Individual- The purchase manager is responsible for acquiring goods from new vendors Temporarily investing funds in common stock investments instead of money market Funds. CEO Purchasing a new line of manufacturing equipment to remodel a production line at one of the company’s major divisions (the purchase represents a major new investment for the organization). Replacing an older machine at one of the company’s major divisions. Rewriting the company’s major computer program for processing purchase orders and accounts payable (the cost of rewriting the program will represent one quarter of the organization’s computer development budget for the year).
Authorization of transactions is a key control in most organizations. Authorizations should not be made by individuals who have incompatible functions. For each transaction (listed as A through I), indicate the individual or function (e.g., the head of a particular department) that should have the ability to authorize that transaction. Briefly provide a rationale for your answer. Writing off old accounts receivable. Committing the organization to acquire another company that is half the size of the existing company. Paying an employee for overtime. Shipping goods on account to a new customer. Individual(Salesperson)- The salesperson may ship the goods which can be supervised by a senior. Purchasing goods from a new vendor. Individual- The purchase manager is responsible for acquiring goods from new vendors Temporarily investing funds in common stock investments instead of money market Funds. CEO Purchasing a new line of manufacturing equipment to remodel a production line at one of the company’s major divisions (the purchase represents a major new investment for the organization). Replacing an older machine at one of the company’s major divisions. Rewriting the company’s major computer program for processing purchase orders and accounts payable (the cost of rewriting the program will represent one quarter of the organization’s computer development budget for the year).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- Authorization of transactions is a key control in most organizations. Authorizations
should not be made by individuals who have incompatible functions. For each
transaction (listed as A through I), indicate the individual or function (e.g., the head of a
particular department) that should have the ability to authorize that transaction.
Briefly provide a rationale for your answer.
- Writing off old
accounts receivable . - Committing the organization to acquire another company that is half the size of the
existing company.
- Paying an employee for overtime.
- Shipping goods on account to a new customer.
Individual(Salesperson)- The salesperson may ship the goods which can be supervised by a senior.
- Purchasing goods from a new vendor.
Individual- The purchase manager is responsible for acquiring goods from new vendors
- Temporarily investing funds in common stock investments instead of money market
Funds. CEO
- Purchasing a new line of manufacturing equipment to remodel a production line at
one of the company’s major divisions (the purchase represents a major new
investment for the organization).
- Replacing an older machine at one of the company’s major divisions.
- Rewriting the company’s major computer program for processing purchase orders
and accounts payable (the cost of rewriting the program will represent one quarter
of the organization’s computer development budget for the year).
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