E7.2 (LO1, 2), E The following control procedures are used at Torres Company for over-the-counter cash receipts. 1. To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked briefcase in the stockroom until it is deposited in the bank. 2. All over-the-counter receipts are processed by three clerks who use a cash register with a single cash drawer. 3. The company accountant makes the bank deposit and then records the day's receipts. 4. At the end of each day, the total receipts are counted by the cashier on duty and reconciled to the cash register total. 5. Cashiers are experienced; they are not bonded. Instructions a. For each procedure, explain the weakness in internal control, and identify the control principle that is violated. b. For each weakness, suggest a change in procedure that will result in good internal control.

E7.2 (LO1, 2), E The following control procedures are used at Torres Company for over-the-counter cash receipts. 1. To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked briefcase in the stockroom until it is deposited in the bank. 2. All over-the-counter receipts are processed by three clerks who use a cash register with a single cash drawer. 3. The company accountant makes the bank deposit and then records the day's receipts. 4. At the end of each day, the total receipts are counted by the cashier on duty and reconciled to the cash register total. 5. Cashiers are experienced; they are not bonded. Instructions a. For each procedure, explain the weakness in internal control, and identify the control principle that is violated. b. For each weakness, suggest a change in procedure that will result in good internal control.

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

Cash Book

So, before coming to the topic of cash books, I will let you briefly explain about the cash so that you all can be familiar with the word cash. Cash comes under the category of the current asset which is used as a medium of exchange for all the financial transactions in the firm. Cash is something that is universally accepted as a mode of payment. So, now comes to the topic i.e., cash book.

Question

ernal control weaknesses over cash receipts and suggest improvements.
E7.2 (LO 1, 2), E The following control procedures are used at Torres Company for over-the-counter cash receipts.
1. To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked briefcase in the stockroom until it is deposited in the bank.
2. All over-the-counter receipts are processed by three clerks who use a cash register with a single cash drawer.
3. The company accountant makes the bank deposit and then records the day's receipts.
4. At the end of each day, the total receipts are counted by the cashier on duty and reconciled to the cash register total.
5. Cashiers are experienced; they are not bonded.
Instructions
a. For each procedure, explain the weakness in internal control, and identify the control principle that is violated.
b. For each weakness, suggest a change in procedure that will result in good internal control.
Identify internal control weaknesses over cash disbursements and suggest improvements.

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Accounting for Cash and cash equivalents

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