true/false True or False: Control over the receipt of cash sales is best achieved when two or more emloyees participate in each Mailroom personnel of a company should prepare a control listing of incoming cash receipts and deposit them intact The audit of cash requires little audit Cash should be deposited

true/false True or False: Control over the receipt of cash sales is best achieved when two or more emloyees participate in each Mailroom personnel of a company should prepare a control listing of incoming cash receipts and deposit them intact The audit of cash requires little audit Cash should be deposited

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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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.
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…
A cash payment under a good control system will have. a. Too much amount Bank book balance b. Appointing different persons to authorize the payment and sign the cheques c. Too much amount book balance d. Maintaining minimum bank book balance
Why do organizations have policies regarding the use of assets and why do staff need to be aware of them and other organizational policies, procedures and accounting standards? Internal control is enhanced by combining the control of a transaction with the record-keeping function.a.True.b. False. For efficiency of operations and better control over cash, a company should maintain only one bank account. i. True. ii. False.
What internal control technique (s) would protect you against the hazards listed below? To hide the theft of further cash payments from that client, an employee writes down a customer's accounts receivable amount as uncollectible.
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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.
Access controls prevent and detect unauthorized and illegal access to the firm's assets. The physical assets at risk in the revenue cycle are inventories and cash. Limiting access to these items would NOT include: A) Locking cash drawers and safes in the cash receipts department B) Making the mail room responsible for opening and recording cash and cheques received from clients C) Warehouse security, such as fences, alarms, and guards D) Using a safe or night deposit box for cash
Review the following statements regarding a petty cash fund used in a business. Select the one that is correct. O A petty cash fund is controlled by top management. O The cashier of a fund will write checks for small payments like postage, supplies and deliveries, O Only the petty cashier is responsible for paying cash from the fund. OA check written against the fund is cashed when the fund is replenished.
Some strategies in management can use to implement controls to ensure the integrity and existence of the client's cash balances. Reconciling cash can be a great control in most cases since receipts tie to deposits so it's accurate and cash exists since it hits the bank account. Now reconciling on a daily basis is important as well but would you be able to negotiate the cash box if the employee was using a lapping fraud to steal money? If they took $100 of cash and issued a manual receipt to the customer then used the next $100 to come in to clear the AR from the first customer on the cash receipt system, wouldn't I still reconcile? What could I do as a manager to prevent this type of fraud from occurring?