Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Chapter 5, Problem 5.7E
To determine
Introduction:
Separating the responsibility of operations, custody of assets and keeping accounting records is important because it helps in checking the employees and their operating managers for any errors or frauds.
To state:
The strengths and weaknesses of controlassociated to the fraud.
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All-Around Sound Co. discovered a fraud whereby one of its front office administrative employees used company funds to purchase goods such as computers, digital cameras, and other electronic items for her own use. The fraud was discovered when employees noticed an increase in the frequency of deliveries from vendors and the use of unusual vendors. After some investigation, it was discovered that the employee would alter thedescription or change the quantity on an invoice in order to explain the cost on the bill.What general internal control weaknesses contributed to this fraud?
An auditor suspects that certain client
employees are ordering merchandise for
themselves over the Internet without recording
the purchase or receipt of the merchandise.
When vendors' invoices arrive, one of the
employees approves the invoices for payment.
After the invoices are paid, the employee
destroys the invoices and the related vouchers.
In gathering evidence regarding the fraud, the
auditor most likely would select items for testing
from the file of all:
Multiple Choice
Cash disbursements.
Approved vouchers.
Receiving reports.
Vendors' invoices.
Answer Please@@@
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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- Solve pleaser itarrow_forwardAssume that brooke miles accounts payable clerk for west coast design inc.stole $48,350 by paying fictitious companies and cashed the checks at a local banks. Describe a control procedure that would have prevented or detected the fraud?arrow_forward1. What does it mean to say that internal control has limitations and what are these limitations? 2. Provide an appropriate response based on the following scenarios. Assume that the accounting clerk posts a customer’s payment for the wrong amount, giving the customer credit for less than he or she actually paid. How will this error be detected? How might this error have been prevented? Assume that the employee who opens the mail steals a customer payment. How will this theft be detected? How might this theft have been prevented? 3. What is petty cash and what purpose(s) does it serve? 4. What types of controls should be in place to make sure people in the office don't just take from petty cash (for their own personal use) whenever they feel like it? In your opinion, what is an appropriate amount to have in petty cash? 5. Prepare the necessary journal entries for each of the following: (a) On March 1, issued a check to establish a petty cash fund of $1,410 (b)…arrow_forward
- The sales of $2,000 made to Shanaya has been posted to the Sara’s account by mistake. It happened because a customer account number was incorrectly entered into the system. Explain what internal control procedure(s) would provide protection against this threat in future?arrow_forwardAllison Everhart, an employee in accounts payable, believes she can run a fictitious invoice through the accounts payable system and collect the money. She knows payments are subject to an audit. Which account would be the best place to hide the fraud?a. Inventory.b. Wage expense.c. Consulting service expense.d. Property tax expense.arrow_forwardWhich of the following is NOT an example of an opportunity to commit fraud in the accounting information system? a. The need to sell confidential information from the database for cash to pay for his medical bills b. User names and passwords of most employees are stored in a shared Google document file c. The employee's discovery that passwords are not required to enter any modules in the accounting information system d. Supervisors are not required to approve transactions entered into by their staff in the accounting systemarrow_forward
- Provide an appropriate response based on the following scenarios. Assume that the accounting clerk posts a customer’s payment for the wrong amount, giving the customer credit for less than he or she actually paid. How will this error be detected? How might this error have been prevented? Assume that the employee who opens the mail steals a customer payment. How will this theft be detected? How might this theft have been prevented?arrow_forwardScenario: You are an assistant manager of a high-end retail store and, through routine end-of-day accounting procedures, you have discovered your long-time coworker, who is also an assistant manager and good friend, has been embezzling from the company. Use your knowledge related to the ways employees conduct fraud to build a case for how your coworker might have embezzled money. How would you utilize the store’s accounting software to access data and find the proper evidence to determine if it truly is fraud? To whom would you report your findings? Would you confront your coworker/friend?arrow_forwardWhat internal control procedure(s) would provide protection against the following threats? a. Theft of goods by the shipping dock workers, who claim that the inventory shortages reflect errors in the inventory records.b. Posting the sales amount to the wrong customer account because a customer account number was incorrectly keyed into the system .c. Making a credit sale to a customer who is already four months behind in making payments on his account. d. Authorizing a credit memo for a sales return when the goods were never actually returned. e. Writing off a customer’s accounts receivable balance as uncollectible to conceal the theft of subsequent cash payments from that customer. f. Billing customers for the quantity ordered when the quantity shipped was actually less due to back ordering of some items .g. Lost sales because of stockouts of several products for which the computer records indicated there was adequate quantity on hand. h. A sales clerk sold a $7,000 wide-screen TV…arrow_forward
- Charles Hart, an accounts payable clerk, is an hourly employee. He never works a minute past 5 P.M. unless the overtime has been approved. Charles has recently found himself faced with some severe financial difficulties. He has been accessing the system from his home during the evening and setting up an embezzlement scheme. As his boss, what control technique(s) discussed in lectures network risks and auditing could you use to help detect this type of fraud?arrow_forwardFor each of the following three independent cases of employee fraud, recommend how to prevent similar problems in the future: Case A: Due to abnormal inventory shrinkage in the audiovisual department at a retail chain store, internal auditors conducted an in- depth audit of the department. They learned that a customer frequently bought large numbers of small electronic components from a certain cashier. The auditors discovered that they had colluded to steal electronic components by not recording the sale of items the customer took from the store. Case B: During an unannounced audit, auditors discovered a payroll fraud when they distributed paychecks instead of department supervisors. When the auditors investigated an unclaimed paycheck, they discovered that the employee quit four months previously after arguing with the supervisor. The supervisor continued to turn in a time card for the employee and pocketed his check. Case C: Auditors discovered an accounts payable clerk who made…arrow_forwardYou are the auditor for Office Supply, which is opening a new location next week. The store manager has established all the controls you recommended for ensuring that sales are recorded properly, and cash is accounted for. The manager has heard from other locations that employees often used returned goods as a means of skimming money from the register. Choose one of the following questions to discuss: How might an employee use returned goods to skim money from the register? What controls would you recommend to prevent or detect fraudulent returns? What audit procedures might you perform to detect fraudulent returns?arrow_forward
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