Required: Which internal control(s) would you recommend to prevent the following situations from occurring? Situation a. Authorization of a credit memo for a customer's account (on receivables) when the goods were never actually returned. b. Theft of funds by the cashier, who cashed several checks and did not record their receipt. c. Inventory stolen by receiving dock personnel. The receiving clerk claimed the inventory was sent to the warehouse, but the warehouse clerk did not record properly. d. Writing off a customer's accounts receivable balances as uncollectible in order to conceal the theft of subsequent cash collections. e. Billing customers for the quantity ordered when the quantity shipped was actually less due to back- ordering of some items. Answer

Required: Which internal control(s) would you recommend to prevent the following situations from occurring? Situation a. Authorization of a credit memo for a customer's account (on receivables) when the goods were never actually returned. b. Theft of funds by the cashier, who cashed several checks and did not record their receipt. c. Inventory stolen by receiving dock personnel. The receiving clerk claimed the inventory was sent to the warehouse, but the warehouse clerk did not record properly. d. Writing off a customer's accounts receivable balances as uncollectible in order to conceal the theft of subsequent cash collections. e. Billing customers for the quantity ordered when the quantity shipped was actually less due to back- ordering of some items. 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 internal control methodology provided below would be the best solution to resolve the following problem? The accountant had trouble reconciling how many cheques were used and the cheques that were left over. a. 1-Establishment of responsibility b. C. 3-Documentation procedures d. 2-Segregation of duties e. 4- Physical and IT controls 5-Independent checks of performance
1. A threat in the expenditure cycle that involves unauthorized individuals making purchases is known as: A. Unauthorized access B. Fraudulent disbursements C. Data breaches D. Inventory theft 2. What is the first step in the expenditure cycle? A. Placing the purchase order B. Recording the transaction C. Authorizing the purchase D. Receiving goods or services 3. Which of the following is not a step in the expenditure cycle? A. Approving the purchase requisition B. Collecting cash from customers C. Receiving goods or services D. Recording the transaction in the general ledger
Internal Control Listed below are four potential errors or problems that could occur in the processing of cash transactions. Review each error or problem and using the drop-down box located beneath each one, identify an internal control principle that could reduce the chance of the error or problem occurring. Select "None" if none of the principles will correct the error or problem. 1. Three cashiers use on cash register and the cash in the drawer is often short of the recorded balance. Answer 2. The same employee is responsible for opening the mail, listing any checks received, preparing the deposit receipt, and recording to the accounts receivable journal. Several customers have complained that their balances are incorrect. Answer3. In an effort to save printing costs, generic receipts without numbers are used for customer sales. Answer4. Because things have been hectic, no budgets were prepared this year. One department seems to be doing less volume in revenue, but cost of…
A serious exposure in the revenue cycle is customer dissatisfaction. What is the related threat and applicable control procedure that address this exposure? A. failure to bill; separation of billing and shipping functions B. failure to bill; bar-codes and RFID technology C. billing errors; reconciliation of shipping documents to sales order D. theft of cash; using ETFs
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.
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
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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
In testing controls over cash disbursements, an auditor most likely would determine that the person who signs the check also: A. Approves the voucher for payment. C B. C. D. Stamps, perforates or otherwise cancels supporting documents. Returns the checks to accounts payable. Is denied access to the supporting documents.
To enhance internal control in the bank reconciliation process, the bank reconciliation should be prepared O a. with the assistance of the bank's employees. O b. by the supervisor. O c. entirely within the computerized accounting system. O d. by an employee who does not take part in or record cash transactions.
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