Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Question
Chapter 5, Problem 5.10E
To determine
Concept Introduction:
Internal Control:
Internal controls are policies and procedures implemented by an organization to attain operational goals and maintain the integrity of accounting. Internal
To Indicate:
The weakness in the internal control and the way to correct it
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Chapter 5 Solutions
Survey of Accounting (Accounting I)
Ch. 5 - Prob. 1SEQCh. 5 - Prob. 2SEQCh. 5 - Prob. 3SEQCh. 5 - Adjustments to the company’s records based on the...Ch. 5 - Prob. 5SEQCh. 5 - Prob. 1CDQCh. 5 - Prob. 2CDQCh. 5 - Prob. 3CDQCh. 5 - Prob. 4CDQCh. 5 - Prob. 5CDQ
Ch. 5 - Prob. 6CDQCh. 5 - Prob. 7CDQCh. 5 - Prob. 8CDQCh. 5 - Prob. 9CDQCh. 5 - Assume that Leslie Hunter, accounts payable clerk...Ch. 5 - Prob. 11CDQCh. 5 - The accounting clerk pays all obligations by...Ch. 5 - Prob. 13CDQCh. 5 - Prob. 14CDQCh. 5 - Do items reported as a credit memorandum on the...Ch. 5 - Prob. 16CDQCh. 5 - Prob. 17CDQCh. 5 - Prob. 5.1ECh. 5 - Prob. 5.2ECh. 5 - Prob. 5.3ECh. 5 - Prob. 5.4ECh. 5 - Prob. 5.5ECh. 5 - Prob. 5.6ECh. 5 - Prob. 5.7ECh. 5 - Prob. 5.8ECh. 5 - Prob. 5.9ECh. 5 - Prob. 5.10ECh. 5 - Prob. 5.11ECh. 5 - Prob. 5.12ECh. 5 - Prob. 5.13ECh. 5 - Prob. 5.14ECh. 5 - Prob. 5.15ECh. 5 - Prob. 5.16ECh. 5 - Prob. 5.17ECh. 5 - Prob. 5.18ECh. 5 - Prob. 5.19ECh. 5 - Entries for note collected by bank Accompanying a...Ch. 5 - Prob. 5.21ECh. 5 - Prob. 5.22ECh. 5 - Prob. 5.23ECh. 5 - Prob. 5.24ECh. 5 - Prob. 5.25ECh. 5 - Prob. 5.1PCh. 5 - Prob. 5.2.1PCh. 5 - Prob. 5.2.2PCh. 5 - Prob. 5.3.1PCh. 5 - Prob. 5.3.2PCh. 5 - Prob. 5.4.1PCh. 5 - Prob. 5.4.2PCh. 5 - Prob. 5.4.3PCh. 5 - Prob. 5.4.4PCh. 5 - Prob. 5.1.1MBACh. 5 - Prob. 5.1.2MBACh. 5 - Prob. 5.1.3MBACh. 5 - Prob. 5.1.4MBACh. 5 - Ratio of cash to monthly cash expenses AcelRx...Ch. 5 - Prob. 5.2.1MBACh. 5 - Prob. 5.2.2MBACh. 5 - Ratio of cash to monthly cash expenses Pacira...Ch. 5 - Ratio of cash to monthly cash expenses Pacira...Ch. 5 - Prob. 5.2.5MBACh. 5 - Prob. 5.3.1MBACh. 5 - Prob. 5.3.2MBACh. 5 - Prob. 5.3.3MBACh. 5 - Prob. 5.3.4MBACh. 5 - Prob. 5.3.5MBACh. 5 - Prob. 5.4.1MBACh. 5 - Prob. 5.4.2MBACh. 5 - Prob. 5.1CCh. 5 - Prob. 5.2CCh. 5 - Prob. 5.3CCh. 5 - Prob. 5.4CCh. 5 - Prob. 5.5.1CCh. 5 - Prob. 5.5.2CCh. 5 - Prob. 5.5.3CCh. 5 - Prob. 5.6C
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Similar questions
- 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_forwardWhat is the advantage of using technology in the internal control system? A. Passwords can be used to allow access by employees. B. Any cash received does not need to be reconciled because the computer tracks all transactions. C. Transactions are easily changed. D. Employees cannot steal because all cash transactions are recorded by the computer/cash register.arrow_forwardDetermine whether each cash receipts procedure is an internal control strength or weakness. 1. If a salesclerk makes an error in recording a cash sale, she can access the register’s electronic record to correct the transaction. 2. All sales transactions, even those for less than $1, are recorded on a cash register. 3. Two employees are tasked with opening mail that contains cash receipts. 4. One of the two employees tasked with opening mail is also the recordkeeper for the business. 5. The supervisor has access to both cash and the accounting records. 6. Receipts are given to customers only for sales that are above $20.arrow_forward
- Determine whether each cash receipts procedure is an internal control strength or weakness. Cash receipts 1. If a sales clerk makes an error in recording a cash sale, they can access the register's electronic record to correct the transaction. 2. One of the two employees tasked with opening mail is also the recordkeeper for the business. 3. The supervisor has access to both cash and the accounting records. 4. Receipts are given to customers for only sales that are above $20. 5. Sales clerks are not required to enter the sale in the register after each transaction. Instead, the company gives employees flexibility to enter sales at the end of the day or week. 6. The recordkeeper of cash transactions is also in charge of depositing cash receipts in the bank. Strength or Weaknessarrow_forward5 Identify which control activity is violated in each of the following situations, and explain how the situation creates an opportunity for fraud or inappropriate accounting practices. Once a month, the sales department sends sales invoices to the accounting department to be recorded. Several clerks at Harper's Groceries use the same cash register drawer. Steve orders merchandise for Baker Company; he also receives merchandise and authorizes payment for merchandise.arrow_forwardThe following control procedures are used in Kelton Company for over-the-counter cash receipts. (a) For each procedure, explain the weakness in internal control and identify the control principle that is violated. Principle Violated 1. 2. 3. 4. 5. Procedure Each store manager is responsible for interviewing applicants for achier jobs. They are hired if they seem honest and trust worthy. All-over-the-counter receipts are registered by three clerks who share a cash register with a single cash drawer. To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attaché case in the stock room until it is deposited in the bank. At the end of each day the total receip are counted by the cashier on duty and reconciled to the cash register total. The company accountant makes the bank deposit and then records the day's receipts. Weaknessarrow_forward
- Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control violated or followed for each procedure. 1. The owner does not use ID scanners to limit access to expensive merchandise. Instead, the owner argues they hire honest employees. 2. Several salesclerks share the same cash drawer. 3. The company devotes resources towards keeping accurate accounting records for machinery. 4. The company does not allow employees with access to cash to modify accounting records. 5. Employees that handle easily transferable assets such as cash are bonded. Weakness or Strength 1. Weakness 2. Weakness 3. Strength 4. Strength 5. Strength Internal Control Principle Apply technological controls Establish responsibilities Maintain adequate records Separate recordkeeping from custody of assets Insure assets and bond key employeesarrow_forwardDetermine whether each procedure described below is an internal control strength or weakness; then identify the internal control violated or followed for each procedure. 1. The owner does not use ID scanners to limit access to expensive merchandise. Instead, the owner argues they hire honest employees. 2. Several salesclerks share the same cash drawer. 3. The company devotes resources towards keeping accurate accounting records for machinery. 4. The company does not allow employees with access to cash to modify accounting records. 5. Employees that handle easily transferable assets such as cash are bonded. Weakness or Strength 1. Weakness 2. Weakness 3. Strength 4. Strength 5. Strength Internal Control Principlearrow_forwardSome 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?arrow_forward
- Identifying internal control weakness in cash receipts Pendley Productions makes all sales on credit. Cash receipts arrive by mail. Larry Chipcllo, the mailroom clerk, opens envelopes and separates the checks from the accompanying remittance advice. Chipello forwards the checks to another employee, who makes the daily bank deposit but has no access to the accounting records. Chipello sends the remittance advice, which shows cash received, to the accounting department for entry in the accounts. Chipello’s only other duty is to grant sales allowances to customers. (A sales allowance decreases the customer’s account receivable.) When Chipello receives a customer check for $575 less than a $45 allowance, he records the sales allowance and forwards the document to the accounting department. Requirements Identify the internal control weakness in this situation. Who should record sales allowances? What is the amount that should be shown in the ledger for cash receipts?arrow_forwardAccounting 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?arrow_forwardIdentifying internal control weakness in cash receipts Pendley Productions makes all sales on credit. Cash receipts arrive by mail. Larry Chipcllo, the mailroom clerk, opens envelopes and separates the checks from the accompanying remittance advices. Chipello forwards the checks to another employee, who makes the daily bank deposit but has no access to the accounting records. Chipello sends the remittance advices, which show cash received, to the accounting department for entry in the accounts. Chipello’s only other duty is to grant sales allowances to customers. (A sales allowance decreases the customer’s account receivable.) When Chipello receives a customer check for $575 less a $45 allowance, he records the sales allowance and forwards the document to the accounting department. Requirements Identify the internal control weakness in this situation. Who should record sales allowances? What is the amount that should be shown in the ledger for cash receipts?arrow_forward
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