ning Objective 1 E8-12 Understanding the Sarbanes-Oxley Act and identifying internal controlstrengths and weaknessesThe following situations suggest a strength or a weakness in internal control.a. Top managers delegate all internal control procedures to the accountingdepartment.b. Accounting department staff (or the bookkeeper) orders merchandise andapproves invoices forpayment.c. Cash received over the counter is controlled by the sales clerk, who rings up thesale and places the cash in the register. The sales clerk matches the total recordedby the register to each day's cash sales.d. The employee who signs checks need not examine the payment packet because heis confident the amounts are correct.Requirements1. Define internal control.2. The system of internal control must be tested by external auditors. What law orrule requires this testing?3. Identify each item in the list above as either a strength or a weakness in internalcontrol, and give your reason for each answer.

PLEASE LIKE THE ANSWER An internal control is a procedure performed with in a company to help to…

E8-12 Understanding the Sarbanes-Oxley Act and identifying internal control strengths and weaknesses The following situations suggest a strength or a weakness in internal control. a. Top managers delegate all internal control procedures to the accounting department. b. Accounting department staff (or the bookkeeper) orders merchandise and approves invoices for payment. c. Cash received over the counter is controlled by the sales clerk, who rings up sale and places the cash in the register. The sales clerk matches the total recorded by the register to each day's cash sales. d. The employee who signs checks need not examine the payment packet because he is confident the amounts are correct. the Requirements 1. Define internal control. 2. The system of internal control must be tested by external auditors. What law or rule requires this testing? 3. Identify each item in the list above as either a strength or a weakness in internal control, and give your reason for each answer.

E8-12 Understanding the Sarbanes-Oxley Act and identifying internal control strengths and weaknesses The following situations suggest a strength or a weakness in internal control. a. Top managers delegate all internal control procedures to the accounting department. b. Accounting department staff (or the bookkeeper) orders merchandise and approves invoices for payment. c. Cash received over the counter is controlled by the sales clerk, who rings up sale and places the cash in the register. The sales clerk matches the total recorded by the register to each day's cash sales. d. The employee who signs checks need not examine the payment packet because he is confident the amounts are correct. the Requirements 1. Define internal control. 2. The system of internal control must be tested by external auditors. What law or rule requires this testing? 3. Identify each item in the list above as either a strength or a weakness in internal control, and give your reason for each answer.

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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Which of the following reflects a weak internal control system? Please explain with full explanation. a. All employees are well supervised. b. A single employee is responsible for comparing a receiving report to an invoice. c. All employees must take their vacations. d. A single employee is responsible for collecting and recording cash.
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An accounting manager, who has full access to a Company’s accounting system also has access to the bank account and is able to send cash payments without supervision. What is an internal control that should be implemented to reduce the risk of theft or fraud in this company?
The following can be appropriately included in an Internal Control Questionnaire for Revenue/Receipt Cycle, except *A. Is the credit department independent of the sales department?B. Are debit or credit memos independently checked against sales invoice data?C. Are accounts receivable periodically reviewed and aged?D. Does the cashier compare the official receipt, deposit slip, and cash receipts journal?E. None of them
18-23 (Objectives 18-3 , 18-4) In testing cash disbursements for the Jay Klein Company, you obtained an understanding of internal control. The controls are reasonably good, and no unusual audit problems arose in previous years.Although there are not many individuals in the accounting department, there is a reasonable separation of duties in the organization. There is a separate purchasing agent who is responsible for ordering goods and a separate receiving department that counts the goods when they are received and prepares receiving reports. There is a separation of duties between recording acquisitions and cash disbursements, and all information is recorded in the two journals independently. The controller reviews all supporting documents before signing the checks, and he immediately mails the checks to the vendors. Check copies are used for subsequent recording.All aspects of internal control seem satisfactory to you, and you perform minimum tests of 25 transactions as a means of…
E8B. ACCOUNTING CONNECTION Developing a convenient means of reimbursing sales representatives with cash for their incidental expenses, such as for meals and supplies, is a problem many companies face. Under one company's plan, the sales representatives submit the receipts for reimbursement to the petty cash custodian. The representative then receives cash from the petty cash fund. What is the weak point in this system? What fundamental principle of internal con- trol is being ignored? What improvement in the procedure can you suggest?
Whole Fruits Market took the following actions to improve internal controls. For each of the following actions, select the internal control principle the company followed. a. Personal ID cards are used to limit access to only authorized employees. b. The company divides responsibility for a transaction between multiple departments. c. Each cashier is designated a specific cash drawer and is solely responsible for cash in that drawer. d. Purchased an insurance (bonding) policy against losses from theft by a cashier. e. To ensure equipment theft does not go undetected, detailed accounting records are kept. f. The company's internal auditors frequently assess the performance of internal controls.
From pages 4-1 and 4-2 of the VLN, the COSO Framework describes 5 components of internal control. What is the purpose of internal controls from a financial accounting perspective? 1. To guarantee no fraud will occur in the organization. 2. To help safeguard the company's assets. 3. To help improve the accuracy and reliability of the accounting information. 4.To prevent collusion. Group of answer choices A. 1,2, and 3 B. 2 and 3 C. 2, 3, and 4 D.1, 2, 3, and 4