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Identify 2 weaknesses (being sure that your response identifies why they are weaknesses - what risk they expose the company to) and a recommendation to correct the weakness.

Identify 2 weaknesses (being sure that your response identifies why they are weaknesses - what risk they expose the company to) and a recommendation to correct the weakness.

FINANCIAL ACCOUNTING
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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Identify 2 weaknesses (being sure that your response identifies why they are weaknesses - what risk they expose the company to) and a recommendation to correct the weakness.

• Because of cash flow problems, Lexsteel always pays suppliers on the last possible day before incurring a penalty for late payment. Supplier invoices are processed and paid weekly. Every Friday, the accounts payable clerk reviews and approves all invoices with a due date the following week. The purchasing manager reviews and approves all purchases prior to e-mailing them to suppliers. • After counting and inspecting incoming deliveries, the receiving clerk enters the following information into the system: • Quantities received for each inventory item • Date and time received Supplier number • After entering that information, the receiving clerk takes the inventory to the inventory control department for storage. • Access to the inventory control department is restricted. Inventory is only released to production when a properly authorized request is received. When the inventory is released, the inventory control clerk updates the perpetual inventory system. . Physical counts of inventory are taken every three months. Discrepancies between the counts and recorded quantities on hand are investigated. Upon resolution of the investigation, the plant manager authorizes adjustments to the perpetual inventory records to change them to the amount actually on hand.
Transcribed Image Text:• Because of cash flow problems, Lexsteel always pays suppliers on the last possible day before incurring a penalty for late payment. Supplier invoices are processed and paid weekly. Every Friday, the accounts payable clerk reviews and approves all invoices with a due date the following week. The purchasing manager reviews and approves all purchases prior to e-mailing them to suppliers. • After counting and inspecting incoming deliveries, the receiving clerk enters the following information into the system: • Quantities received for each inventory item • Date and time received Supplier number • After entering that information, the receiving clerk takes the inventory to the inventory control department for storage. • Access to the inventory control department is restricted. Inventory is only released to production when a properly authorized request is received. When the inventory is released, the inventory control clerk updates the perpetual inventory system. . Physical counts of inventory are taken every three months. Discrepancies between the counts and recorded quantities on hand are investigated. Upon resolution of the investigation, the plant manager authorizes adjustments to the perpetual inventory records to change them to the amount actually on hand.
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