Why do organizations have policies regarding the use of assets and why do staff need to be awareof them and other organizational policies, procedures and accounting standards? Internal control isenhanced 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 bankaccount. i. True. ii. False.

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Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter8: Fraud, Internal Controls, And Cash

Section: Chapter Questions

Problem 4MC: Which of the following is not considered to be part of the internal control structure of a company?...

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Which of the following is not considered to be part of the internal control structure of a company? A. Ensure that assets are kept secure. B. Monitor operations of the organization to ensure maximum efficiency. C. Publish accurate financial statements on a regular basis. D. Ensure assets are properly used.
A bank reconciliation takes time and must balance. An employee was struggling in balancing the bank reconciliation. Her supervisor told her to plug (make an unsupported entry for) the difference, record to Miscellaneous Expense, and simply move on. Discuss the internal controls problem with this directive.
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E2B. Some conditions for internal control follow. a. Transactions are executed in accordance with management's general or specific authorization. b. Transactions are recorded as necessary to permit preparation of financial statements and maintain accountability for assets. c. Access to assets is permitted only as allowed by management. d. At reasonable intervals, the records of assets are compared with the existing assets. David Pinto, who operates a small grocery store, has established the following policies with regard to the checkout cashiers: 1. Each cashier has his or her own cash drawer, to which no one else has access. 2. Cashiers may accept checks for purchases under $50 with proper identification. For checks over $50, they must receive approval from Pinto. 3. Every sale must be rung up on the cash register and a receipt given to the customer. Each sale is recorded on a tape inside the cash register. 4. At the end of each day, Pinto counts the cash in the drawer and compares it…
Preparing bank reconciliation statement is: Select one: a. Not necessary when a perpetual inventory system is used. b. Not required for PLC companies. c. Not necessary when a periodic inventory system is used. d. A sound control activity around organizations’ cash function
Cash, Fraud, and Internal Control Main objectives To apply an understanding of internal controls. To an understanding of unethical behavior and how address it. To apply an understanding of controls dealing with segregation of duties and checks and balances. To apply the theoretical knowledge in the syllabus to a case study. To know the company's financial statements in detail. To apply financial analysis techniques. To apply the concept of value creation. Description of the activity and instructions Harriet Knox, Ralph Patton, and Marcia Diamond work for a family physician, Dr. Gwen Conrad, who is in private practice. Dr. Conrad is knowledgeable about office management practices and has segregate the cash receipt duties as follows. Knox opens the mail and prepares a triplicate list of money received. She sends one copy of the list to Patton, the cashier, who deposits the receipts daily in the bank. Diamond, the recordkeeper, receives a copy of the list and posts payments…
Which of the following is a good internal control for cash payments? A.Payments to suppliers should be made as quickly as possible B.An experienced accountant should have total responsibility for all cash payment functions. C.Payments should be authorised before they are made D.Supporting documentation should be destroyed immediately after payment to avoid incorrectly twice.
As part of a strong internal control system, which of the following accounting duties needsto be separated from cash handling?a. Record keepingb. Filingc. Transaction approvald. Both a and c need to be separated from cash handling.
Assess the following statement as true or false. Enter T for true or F for false. 1. 2. 3. 4. Bank reconciliation is one of documentation procedure control. A cash budget contributes to more effective internal control. of segregation of duties. 5. to apply. Allow only one check signer has access to cash recording is an example The assumption of inventory method (i.e. FIFO etc.) may not match the physical flow of goods. Technology has make the perpetual inventory more popular and easier
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Which of the following generally would not be considered good internal control of cash receipts? a. Allowing customers to pay with a debit card. b. Requiring the employee receiving the cash from the customer to also deposit the cash into the company’s bank account. c. Recording cash receipts as soon as they are received. d. Allowing customers to pay with a credit card.

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