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. Personal ID cards are used to limit access to only authorized em b. The company divides responsibility for a transaction between mi c. Each cashier is designated a specific cash drawer and is solely r d. Preprinted forms are used to reduce the chance of missing trans e. The company's internal auditors frequently assess the performar f. Prohibit the recordkeeper from having control over cash.

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. Personal ID cards are used to limit access to only authorized em b. The company divides responsibility for a transaction between mi c. Each cashier is designated a specific cash drawer and is solely r d. Preprinted forms are used to reduce the chance of missing trans e. The company's internal auditors frequently assess the performar f. Prohibit the recordkeeper from having control over cash.

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 of the following reflects a weak internal control system? Please explain with full explanation. a. All employees are well supervised. b. A single employee is responsible for comparing a receiving report to an invoice. c. All employees must take their vacations. d. A single employee is responsible for collecting and recording cash.
None
An accounting manager, who has full access to a Company’s accounting system also has access to the bank account and is able to send cash payments without supervision. What is an internal control that should be implemented to reduce the risk of theft or fraud in this company?
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.
The expense cycle offers employees many opportunities to commit fraudin processing cash purchases and cash disbursements. Buyers usually becomeeasy targets for suppliers who offer large returns if willing to transactmore. Analytical procedures are a cost-effective means of identifying accounts in the expense cycle that are misstated.a. Please list some of the analytical procedures the auditor may use forestimate the likelihood of misstatement and explain the significance of the audit?b. Why a trade payable turnover day analysis provides a more precise analysis of debteffort rather than current ratio?c. Why do auditors pay more attention to debt understatement than debt overstatement?d. Please identify the elements of environmental control that are relevant toinitiation and recording of purchases?
Whole Fruits Market took the following actions to improve internal controls. For each of the following actions, select the internal control principle the company followed. a. Personal ID cards are used to limit access to only authorized employees. b. The company divides responsibility for a transaction between multiple departments. c. Each cashier is designated a specific cash drawer and is solely responsible for cash in that drawer. d. Purchased an insurance (bonding) policy against losses from theft by a cashier. e. To ensure equipment theft does not go undetected, detailed accounting records are kept. f. The company's internal auditors frequently assess the performance of internal controls.
As the auditor of Sample Limited you note the following matters relating to the internal control of its sales system. i) The sales department accepts order without first checking the inventory level with the warchouse, ii) Goods are dispatched to customers without recording customer's signatures as proof of receipt of goods. iii) Orders of goods placed by customers are properly recorded but they are not forwarded timely to the dispatch department for fulfilling the order. For each of the above deficiencies, identify the possible impact on the company's operation and recommend a control to address it. Explain why an auditor cannot perform only test of control in an audit.