Identify the internal control principles applicable to cash receipts. BE7.5 (LO 2), C Jolson Company has the following internal control procedures over cash receipts. Identify the internal control principle that is applicable to each proced a. All over-the-counter receipts are entered in cash registers. b. All cashiers are bonded. c. Daily cash counts are made by cashier department supervisors. d. The duties of receiving cash, recording cash, and custody of cash are assigned to different individuals. e. Only cashiers may operate cash registers.
Identify the internal control principles applicable to cash receipts. BE7.5 (LO 2), C Jolson Company has the following internal control procedures over cash receipts. Identify the internal control principle that is applicable to each proced a. All over-the-counter receipts are entered in cash registers. b. All cashiers are bonded. c. Daily cash counts are made by cashier department supervisors. d. The duties of receiving cash, recording cash, and custody of cash are assigned to different individuals. e. Only cashiers may operate cash registers.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:**Internal Control Principles Applicable to Cash Receipts**
**BE7.5 (LO2)**
C Jolson Company has implemented the following internal control procedures over cash receipts. Each procedure corresponds to a specific internal control principle to ensure effective management and security of cash transactions:
a. **All over-the-counter receipts are entered in cash registers.**
- This procedure ensures that every transaction is recorded, reducing the risk of errors and potential fraudulent activities.
b. **All cashiers are bonded.**
- Bonding cashiers provides a form of insurance that protects the company against losses caused by fraudulent activities committed by employees handling cash.
c. **Daily cash counts are made by cashier department supervisors.**
- Regular cash counts by supervisors increase oversight and help promptly identify discrepancies in cash handling.
d. **The duties of receiving cash, recording cash, and custody of cash are assigned to different individuals.**
- Separation of duties is crucial in internal controls to prevent fraud and errors by ensuring no single individual has control over all aspects of a financial transaction.
e. **Only cashiers may operate cash registers.**
- Restricting access to cash registers minimizes the risk of unauthorized transactions and maintains transaction accountability.
**Journal Entries for Cash Overage and Shortfall:**
Organizations should make appropriate journal entries to record cash overages and shortfalls to maintain accurate financial records. These entries help reconcile actual cash on hand with recorded transactions.
This set of internal controls is vital for safeguarding assets, ensuring accurate and reliable financial information, and promoting efficient operations within the company.
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