Determine whether each cash receipts procedure is an internal control strength or weakness. Cash receipts 1. If a sales clerk makes an error in recording a cash sale, they can access the register's electronic record to correct the transaction. 2. One of the two employees tasked with opening mail is also the recordkeeper for the business. 3. The supervisor has access to both cash and the accounting records. 4. Receipts are given to customers for only sales that are above $20. 5. Sales clerks are not required to enter the sale in the register after each transaction. Instead, the company gives employees flexibility to enter sales at the end of the day or week. 6. The recordkeeper of cash transactions is also in charge of deposit cash receipts in the bank. Strength or Weakness

Determine whether each cash receipts procedure is an internal control strength or weakness. Cash receipts 1. If a sales clerk makes an error in recording a cash sale, they can access the register's electronic record to correct the transaction. 2. One of the two employees tasked with opening mail is also the recordkeeper for the business. 3. The supervisor has access to both cash and the accounting records. 4. Receipts are given to customers for only sales that are above $20. 5. Sales clerks are not required to enter the sale in the register after each transaction. Instead, the company gives employees flexibility to enter sales at the end of the day or week. 6. The recordkeeper of cash transactions is also in charge of deposit cash receipts in the bank. Strength or Weakness

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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Read and analyze each of the transactions and explain whether they are considered improper segregation of functions? Explain your answer. ed from ro rata hich person The billing department prepares the customers' invoices and records the sale in the sales journal. a. b. Mailroom clerk open cash receipts envelopes from customers and also prepares the remittance list. ses Accounting clerk receives journal vouchers from various departments and post to the GL accounts. ensation C. does and 00.00 d. The sales department approves sales credit memos as the result of product returns and forwards these to the AR department, which adjusts the customer accounts to reflect the return. II
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(b) The following information describes part of the cash collection procedure at Ritaj Sdn.Bhd. It is a small company which processes its daily transactions manually. 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…
Use 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…
3 Nolan Company has the following internal control procedures over cash receipts. Identify the internal control principle that is applicable to each procedure. (a) All over-the-counter receipts are entered in cash registers. (b) The duties of receiving cash, recording cash, and having custody of cash are assigned to different individuals. (c) Daily cash counts are made by cashier department supervisors. (d) All cashiers are bonded. (e) Only cashiers may operate cash registers.
Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control violated or followed for each procedure. 1. The owner does not use ID scanners to limit access to expensive merchandise. Instead, the owner argues they hire honest employees. 2. Several salesclerks share the same cash drawer. 3. The company devotes resources towards keeping accurate accounting records for machinery. 4. The company does not allow employees with access to cash to modify accounting records. 5. Employees that handle easily transferable assets such as cash are bonded. Weakness or Strength 1. Weakness 2. Weakness 3. Strength 4. Strength 5. Strength Internal Control Principle
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Required: Which internal control(s) would you recommend to prevent the following situations from occurring? Situation a. Authorization of a credit memo for a customer's account (on receivables) when the goods were never actually returned. b. Theft of funds by the cashier, who cashed several checks and did not record their receipt. c. Inventory stolen by receiving dock personnel. The receiving clerk claimed the inventory was sent to the warehouse, but the warehouse clerk did not record properly. d. Writing off a customer's accounts receivable balances as uncollectible in order to conceal the theft of subsequent cash collections. e. Billing customers for the quantity ordered when the quantity shipped was actually less due to back- ordering of some items. Answer
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Which internal control activity is being violated when the cashier in a retail store also records the daily receipts in a journal? adequate documents and records safeguards over assets and records independent checks on recorded amounts segregation of duties