Identify the principle of internal control to each of the following cases.1.Cash is locked in a safe overnight.2.Employees who receive shipments of goods do not have access to the accounting records for merchandise.3.Shipping documents are pre-numbered.4.The bookkeeper does not have physical custody of assets.5.Only the treasurer of the company can sign checks.

Cash is locked in a safe overnight. - Safeguarding of Assets This control measure protects the…

Answered: Identify the principle of internal…

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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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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XYZ Company has considerable cash collections on a regular basis. The cashier receives the cash, records it and then banks it at the end of each day. Since a single person is responsible for access to cash, the financial director is concerned that fraud and error may occur in cash handling and recording. Suggest the financial director several internal controls to prevent such errors or misappropriations? (at least 3 controls).
Indicate whether the following statements are true or false. A guideline for safeguarding cash is to separate the duties of those who have custody of cash from this who keep cash records. Choose... + A guideline for safeguarding cash is that all cash receipts be deposited monthly or yearly. Choose... Separation of duties eliminates the possibility of collusion to steal an asset and hide the theft from the records. Choose... + A voucher system of control is a control system exclusively for cash receipts Choose...
Provide an example of an internal control and how it can prevent breakdown or fraud. In a company, what internal controls do one encounter on a regular basis? Are those controls appreciated or viewed as a nuisance that must be worked around? Explain. What are the major components of an internal control system? Are these components always necessary? On March 1, the actual cash received from cash sales was $53,649 and the amount indicated by the cash register total was $53,542. Journalize the entry to record the cash receipts and cash sales.
Whole Fruits Market took the following actions to improve internal controls. For each of the following actions, identify the internal control principle the company followed. a. Prohibit the recordkeeper from having control over cash. b. Purchased an insurance (bonding) policy against losses from theft by a cashier. c. Each cashier is designated a specific cash drawer and is solely responsible for cash in that drawer. d. Detailed records of inventory are kept to ensure items lost or stolen do not go unnoticed. e. Digital time clocks are used to register which employees are at work at what times. f. External auditors are regularly hired to evaluate internal controls.
Rolling Hills Ltd. has the following internal controls over cash payments. Identify the control activity that is applicable to each procedure. 1. 2. 3. 4. 5. 6. Company cheques are prenumbered. The bank statement is reconciled monthly by the assistant controller. Blank cheques are stored in a safe in the controller's office. Both the controller and the assistant controller are required to sign cheques or authorize electronic payments. Cheque signers are not allowed to record cash payments. All payments are made by cheque or electronic transfer. Assignment of responsibility Review and reconciliation Segregation of duties Physical controls Documentation
The following are deficiencies in internal controls over cash. a. When the cashier isn't available, Amy prepares both the deposit and opens the mail. b. The mail clerk may not prepare remittance advice for the A/R department if a customer does not submit a one with payment. c. Sometimes, the treasurer's department does not stop the supporting documents for cash disbursements. d. John handles both the customer correspondence concerning monthly statements and making the bank deposits. e. Mike handles incoming mail and also prepares bank reconciliations; however, the bank reconciliations are not done in a timely manner. For each deficiency: Determine what applicable audit procedure(s) should be conducted to identify whether any material misstatements exist Explain why you think this procedure is best for this situation. Consider each deficiency independently of the others. While each deficiency presents potential issues, identify two that stand out as the worse with your professional…
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
The ledger accounts of the Pab Eba Accessories for the year ended Dec. 31, 2020 are as follows: Accounts Payable |Accounts Receivable |Accumulated Depreciation - Motor Vehicle Accumulated Depreciation - Office Equipment | Advertising Expense Cash Depreciation Expense - Motor Vehicle Depreciation Expense - Office Equipment Insurance Expense Interest Expense Interest Payable Land Merchandise Inventory |Mortgage Payable |Motor Vehicle |Notes Payable due in 2 years Office Equipment Office Supplies Office Supplies Expense Pab Eba, Capital Pab Eba, Withdrawals Prepaid Advertising Prepaid Rent Purchases Purchases Discounts Purchases Returs & Allowances Rent Expense Salaries Expense Salaries Payable Sales Sales Discounts Sales Returns & Allowances Transportation In Transportation Out Travel Expense 424,260 714,000 198,000 1,305,824 310,000 71,550 120,000 252,000 1,414,200 77,781 485,000 63,639 70,000 150,000 570,000 600,000 548,000 2,100,000 1,100,000 750,000 530,000 52,000 2,380,000 95,200…
The following questions are listed on the internal control questionnaire for ABC Corporation:i. Are cash receipts deposited intact daily?ii. Does an employee verify and approve cash discounts taken?Required: For each of the above questions, identifya. the financial statement assertion to which the control relates.

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