AUDITING & ASSURANCE SERVICES CONNECT AC
10th Edition
ISBN: 9781259292057
Author: MESSIER
Publisher: MCG
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Chapter 10, Problem 10.14MCQ
To determine
Concept Introduction:
Internal controls are policies and procedures defined by the management to ensure the smooth functioning of the business processes. Internal controls ensure the complete and correct accounting and safeguards to the assets.
To choose: the control that would deter the lapping of collections from customers.
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Which of the following internal control activities most likely would deter lapping of collections from customers?a. Independent internal verification of dates of entry in the cash receipts journal with dates of daily cash summaries.b. Authorization of write-offs of uncollectable accounts by a supervisor independent of credit approval.c. Separation of duties between receiving cash and posting the accounts receivable ledger.d. Supervisory comparison of the daily cash summary with the sum of the cash receipts journal entries.
Which of the following internal controls is a common detective control over cash and cash transactions?
a. monthly or periodic bank account reconciliation
b. separation of duties between the approval of invoices and the disbursements duties
c. authorization for a payroll rate change
d. mailing of account statements to customers
Which of the following is an effective internal control for cash payments?
A.Payments should be authorised before they are made
B.Payments to suppliers should be made as quickly as possible
C.An experienced accountant should have total responsibility for all cash payment functions
D.Supporting documentation should be destroyed immediately afterpayment to avoid incorrectly paying twice
Chapter 10 Solutions
AUDITING & ASSURANCE SERVICES CONNECT AC
Ch. 10 - Prob. 10.1RQCh. 10 - Prob. 10.2RQCh. 10 - Prob. 10.3RQCh. 10 - Prob. 10.4RQCh. 10 - Prob. 10.5RQCh. 10 - Prob. 10.6RQCh. 10 - Prob. 10.7RQCh. 10 - Prob. 10.8RQCh. 10 - Prob. 10.9RQCh. 10 - Prob. 10.10RQ
Ch. 10 - Prob. 10.11RQCh. 10 - Prob. 10.12MCQCh. 10 - Prob. 10.13MCQCh. 10 - Prob. 10.14MCQCh. 10 - Prob. 10.15MCQCh. 10 - Prob. 10.16MCQCh. 10 - Prob. 10.17MCQCh. 10 - Prob. 10.18MCQCh. 10 - Prob. 10.19MCQCh. 10 - Prob. 10.20MCQCh. 10 - Prob. 10.21MCQCh. 10 - Prob. 10.22MCQCh. 10 - Prob. 10.23MCQCh. 10 - Prob. 10.24PCh. 10 - Prob. 10.25PCh. 10 - Prob. 10.26PCh. 10 - Prob. 10.27PCh. 10 - Prob. 10.28PCh. 10 - Prob. 10.29PCh. 10 - Prob. 10.30P
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- There are several elements to internal controls. Which of the following would not address the issue of having cash transactions reported in the accounting records? A. One employee would have access to the cash register. B. The cash drawer should be closed out, and cash and the sales register should be reconciled on a prenumbered form. C. Ask customers to report to a manager if they do not receive a sales receipt or invoice. D. The person behind the cash register should also be responsible for making price adjustments.arrow_forwardin 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 b. stamps, perforates or cancel supporting documents c. is denied access to supporting documents d. returns the check to accounts payablearrow_forwardWhich of the following is not an example of control procedures to safeguard cash received from accounts receivables? A.All receipts of cash should be recorded in the cash acount B.Employees keep records of all the receipts,with details of the amount received C.One employee is in charge of receiving cash and another employee in charge of preparing accouting records D.One employee should be responsible for collecting and banking cash receipts on a daily basisarrow_forward
- Which of the following internal control activities will most likely prevent the concealment of a cash shortage by improperly writing off a trade account receivable?a. Write-offs must be approved by a responsible officer after review of credit department recommendations and supporting evidence.b. Write-offs must be supported by an aging schedule showing that only receivables overdue several months have been written off.c. Write-offs must be approved by the cashier who is in a position to know whether the receivables have, in fact, been collected.d. Write-offs must be authorized by company field sales employees who are in a position to determine customers’ financial standing.arrow_forwardWhat feature(s) could SEI have installed in its cash receipts internal controls that would have been expected to prevent the cash receipts journal and recorded cash sales from reflecting more than the amount shown on the daily deposit slips?arrow_forwardAt Emerson Company, one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the journal and ledger. Which of the following is the best explanation of this type of internal control principle over cash receipts? Physical controls. Documentation procedures. Mechanical controls. Segregation of duties.arrow_forward
- Which of the following is an internal control guideline for better management of cash receipts? a.Endorse checks immediately upon receipt with the stamp "For Receipt Only". b.Maintain separation of duties between cash handling and cash recording. c.A bookkeeper should be designated to open all the mail in a company. d.Post cash receipts to the Accounts Payable account as soon as possible.arrow_forwardThe 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 themarrow_forwardExplain why each of the following combinations of tasks should or should not beseparated to achieve adequate internal control.a. Approval of bad debt write-offs and the reconciliation of the accounts receivablesubsidiary ledger and the general ledger control account.b. Distribution of payroll checks to employees and approval of employee time cards.c. Posting of amounts from both the cash receipts and the cash disbursements journalsto the general ledger.d. Writing checks to vendors and posting to the cash account.e. Recording cash receipts in the journal and preparing the bank reconciliation.arrow_forward
- Good internal controls include upon receiving checks from customers by mail, a responsible employee should A. Add the checks to the daily cash summary B. Verify that check is supported by prenumbered sales invoices C. Prepare a duplicate listing of checks received D. Record the checks in the cash receipts journalarrow_forwardWhich of the following is NOT an example of an internal control system? Select one: a )Prenumber checks b)Maintain separate duties between cash handling and cash recording c)Keep petty cash locked up and under one person’s control D)Make weekly depositsarrow_forwardWhich of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the revenue cycle? a. Fictitious transactions may be recorded that cause an understatement of revenues and overstatement of receivables b. Claim received from customers for goods returned may be intentionally recorded in other customer’s accounts. c. Authorization of credit memos by personnel who receive cash may permit the misappropriation of cash d. The failure to prepare shipping documents may cause an overstatement of inventory balancesarrow_forward
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