FINANCIAL & MANAGERIAL ACCOUNTING (ACCES
9th Edition
ISBN: 9781265484040
Author: Wild
Publisher: MCG
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Question
Chapter 6, Problem 7E
To determine
Concept Introduction:
Internal control: Internal control refers to the process where all the authorities given are supervised and ensured that they are working in control environment complying with all policies and procedures with ethical conduct.
Whether each cash payment procedure is internal control strength or weakness.
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Determine whether each cash payment procedure is an internal control strength or weakness. 1. A voucher system is used for all payments of liabilities. 2. The owner of a small business has authority to write and sign checks. 3. When the owner is out of town, the recordkeeper is in charge of signing checks. 4. To save time, all departments are allowed to incur liabilities. 5. Payments over $100 are made by check. 6. Requesting and receiving merchandise are handled by the same department.
Match each of the following cash payment activities to the internal control principle to which itbest relates. Enter the appropriate letter in the space provided.1. The business manager has the only key to thecheck-signing equipment.2. The purchasing manager orders all goods andservices for the business.3. A bank reconciliation is prepared monthly.4. Prenumbered checks are used for all payments.5. The company asks suppliers to deliver their merchandise to the warehouse but mail their invoicesto the accounting department.A. Establish responsibilityB. Segregate dutiesC. Restrict accessD. Document proceduresE. Independently verify
Match each of the following cash receipt activities to the internal control principle to which it bestrelates. Enter the appropriate letter in the space provided.1. A list of checks received in the mail is prepared.2. Total cash receipts are compared to the amounton the bank deposit slip.3. A password is required to open the cash register.4. Price changes at the checkout require a manager’sapproval.5. Cashiers are required to count the cash in theirregister at the beginning and end of each shift.A. Establish responsibilityB. Segregate dutiesC. Restrict accessD. Document proceduresE. Independently verify
Chapter 6 Solutions
FINANCIAL & MANAGERIAL ACCOUNTING (ACCES
Ch. 6 - Prob. 1QSCh. 6 - Prob. 2QSCh. 6 - Prob. 3QSCh. 6 - Prob. 4QSCh. 6 - Prob. 5QSCh. 6 - Prob. 6QSCh. 6 - Prob. 7QSCh. 6 - Prob. 8QSCh. 6 - Prob. 9QSCh. 6 - Prob. 10QS
Ch. 6 - Prob. 11QSCh. 6 - Prob. 12QSCh. 6 - Prob. 13QSCh. 6 - Prob. 14QSCh. 6 - Prob. 15QSCh. 6 - Prob. 16QSCh. 6 - Prob. 1ECh. 6 - Prob. 2ECh. 6 - Prob. 3ECh. 6 - Prob. 4ECh. 6 - Prob. 5ECh. 6 - Prob. 6ECh. 6 - Prob. 7ECh. 6 - Prob. 8ECh. 6 - Prob. 9ECh. 6 - Prob. 10ECh. 6 - Prob. 11ECh. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Prob. 16ECh. 6 - Prob. 17ECh. 6 - Prob. 1PSACh. 6 - Prob. 2PSACh. 6 - Prob. 3PSACh. 6 - Prob. 4PSACh. 6 - Prob. 5PSACh. 6 - Prob. 1PSBCh. 6 - Prob. 2PSBCh. 6 - Prob. 3PSBCh. 6 - Prob. 4PSBCh. 6 - Prob. 5PSBCh. 6 - Prob. 6SPCh. 6 - Prob. 1GLPCh. 6 - Prob. 1.1AACh. 6 - Prob. 1.2AACh. 6 - Prob. 1.3AACh. 6 - Prob. 1.4AACh. 6 - Prob. 1.5AACh. 6 - Prob. 2.1AACh. 6 - Prob. 2.2AACh. 6 - Prob. 3.1AACh. 6 - Prob. 3.2AACh. 6 - Prob. 3.3AACh. 6 - Prob. 3.4AACh. 6 - Prob. 1DQCh. 6 - Prob. 2DQCh. 6 - Prob. 3DQCh. 6 - Prob. 4DQCh. 6 - Prob. 5DQCh. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Prob. 8DQCh. 6 - Prob. 9DQCh. 6 - Prob. 10DQCh. 6 - Prob. 11DQCh. 6 - Prob. 12DQCh. 6 - Prob. 13DQCh. 6 - Prob. 14DQCh. 6 - Harriet Knox, Ralph Patton, and Marcia Diamond...Ch. 6 - Prob. 2BTNCh. 6 - Prob. 3BTNCh. 6 - Prob. 4BTN
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Similar questions
- Determine 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_forwardThe following control procedures are used in Mendy Lang’s Boutique Shoppe for cash disbursements. 1.The company accountant prepares the bank reconciliation and reports any discrepancies to the owner.2.The store manager personally approves all payments before signing and issuing checks.3. Each week, 100 company checks are left in an unmarked envelope on a shelf behind the cash register.4. After payment, bills are filed in a paid invoice folder.5. The company checks are unnumbered.Instructions (a) For each procedure, explain the weakness in internal control, and identify the internal control principle that is violated.(b) For each weakness, suggest a change in the procedure that will result in good internal control.arrow_forwardAll of the following are controls for cash received over the counter excepta. a printed receipt must be given to the customer.b. the cash drawer should open only when the sales clerk enters an amount on the keys.c. the customer should be able to see the amounts entered into the cash register.d. the sales clerk must have access to the cash register tape.arrow_forward
- Douglas and Son, Inc., uses the following process for its cash receipts: The company typically receives cash and check sales each day and places them in a single drawer. Each Friday, the cash clerk records the amount of cash received and deposits the money in the bank account. Each quarter, the controller requests information from the bank necessary to prepare a bank reconciliation.Required:Discuss Douglas and Son’s internal control procedures related to cash receipts, noting both weaknesses and strengths.arrow_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_forwardDetermine 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_forward
- 1)The credit department runs a credit check on all customers who apply for credit one in account proves uncollectible, the credit department authorizes the right off of the accounts receivable number 2) cash receipts come into the credit department which separates the cash received from the customers remittance slips. The credit department list all cash receipts by customer name and amount of cash received 3) The cash goes to the treasurer for deposit in the bank the remittance slip go to the accounting department for posting to customers. 4) The controller compares the daily deposit slip to the total amount posted to the customers account. Both amounts must agree.arrow_forwardGood 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_forwardThe following procedures were recently implemented by SUP Yoga Co.: Each cashier is assigned a separate cash register drawer to which no other cashier has access. All sales are rung up on the cash register, and a receipt is given to the customer. All sales are recorded on a record locked inside the cash register. At the end of a shift, each cashier counts the cash in his or her cash register, unlocks the cash register record, and compares the amount of cash with the amount on the record to determine cash shortages and overages. Checks received through the mail are given daily to the accounts receivable clerk for recording collections on account and for depositing in the bank. Vouchers and all supporting documents are stamped PAID after being paid by the treasurer. Disbursements are made from the petty cash fund only after a petty cash receipt has been completed and signed by the payee. The bank reconciliation is prepared by the accountant. Instructions: Indicate whether each of the…arrow_forward
- Identify the internal control procedures applicable to cash receipts for Ferguson Company in each of the following cases. 1. All cashiers are bonded. Documentation Procedures Physical Controls Segregation of Duties Establishment of Responsibility Human Resource Controls 2. The treasurer compares the total cash receipts to the bank deposit daily. Independent Internal Verification 3. The bookkeeper records cash receipts, which are held by the treasurer. 4. Only the treasurer holds cash receipts. 5. Deposit slips are completed for each deposit.arrow_forwardEach situation below describes an internal control weakness in the cash receipts process. Identifywhich of the five internal control principles is violated, explain the weakness, and then suggest achange that would improve internal control.a. Cashiers prepare a cash count summary, attach tapes from the cash register showing total receipts,and then prepare a bank deposit slip, which they take to the bank for deposit. After the deposit ismade, all documents are forwarded to the accounting department for review and recordingarrow_forwardJust Hangin' Night Club maintains an imprest petty cash fund of $100, which is under the control of Sandra Morgan. At March 31, the fund holds $9 cash and petty cash tickets for office supplies, $80, and delivery expense, $25. Read the requirements. Requirement 1. Complete the following to explain how an imprest petty cash system works. Maintaining the Petty Cash account at its is the nature of an imprest system. The imprest system requires that, Y. This clearly identifies the the petty cash box contains and it is the system's main internalarrow_forward
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