FINANCIAL AND MANAGERIAL ACCOUNTING
9th Edition
ISBN: 2818440048890
Author: Wild
Publisher: MCG CUSTOM
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Question
Chapter 6, Problem 7QS
a.
To determine
Concept Introduction:
Internal Control: Internal control refers to the ideas, policies, and practices that are established by a business to make sure they monitor risk factors and address them to prevent losses or fraud. Internal controls serve to reduce risks, safeguard assets, and maintain record accuracy.
To state: Whether the given statement is true or false.
b.
To determine
Concept Introduction:
Internal Control: Internal control refers to the ideas, policies, and practices that are established by a business to make sure they monitor risk factors and address them to prevent losses or fraud. Internal controls serve to reduce risks, safeguard assets, and maintain record accuracy.
To state: Whether the given statement is true or false.
c.
To determine
Concept Introduction:
Internal Control: Internal control refers to the ideas, policies, and practices that are established by a business to make sure they monitor risk factors and address them to prevent losses or fraud. Internal controls serve to reduce risks, safeguard assets, and maintain record accuracy.
To state: Whether the given statement is true or false.
d.
To determine
Concept Introduction:
Internal Control: Internal control refers to the ideas, policies, and practices that are established by a business to make sure they monitor risk factors and address them to prevent losses or fraud. Internal controls serve to reduce risks, safeguard assets, and maintain record accuracy.
To state: Whether the given statement is true or false.
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Students have asked these similar questions
Which of the following procedures would weaken control
over cash receipts that arrive through the mail?
Multiple Choice
After the mail is opened, a list (in triplicate) of the
money received is prepared with a record of the
sender's name, the amount, and an explanation of
why the money is sent.
The cashier deposits the money in the bank and the
recordkeeper records the amounts received in the
accounting records.
For safety, only one person should open the mail,
and that person should deposit the cash received in
the bank at the end of each month.
The bank reconciliation is prepared by a person who
does not handle cash or record cash receipts.
The employees handling the cash receipts are
bonded.
Which of the following internal controls is the most effective in preventing employees from using company funds to purchase personal items?
A.
Adequate separation of duties between the cash receipts and the recording of cash receipts.
B.
Cash reconciliations are performed daily.
C.
The purchase requisition forms are required for all purchases and the warehouse staff check the deliveries against the approved purchase requisition forms to make sure the delivered items match the pre-approved orders.
D.
Cash payments need to be approved based on supporting documents, such as purchase orders and receiving reports.
E.
purchase requisition forms are pre-numbered, and their sequence is accounted for.
Which of the following controls would be most effective in detecting a failure torecord cash received from customers paying on their accounts?(1) A person in accounting reconciles the bank deposit to the cash receipts journal.(2) Transactions recorded in the cash receipts journal are posted on a real-timebasis to the accounts receivable master file.(3) Monthly statements are sent to customers and any discrepancies are resolved bysomeone independent of cash handling and accounting.(4) Deposits of cash received are made daily.
Chapter 6 Solutions
FINANCIAL AND MANAGERIAL ACCOUNTING
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
- 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_forwardWhich of the following are important elements of a cash disbursement control system? Note: Select all that apply. Check All That Apply All expenditures are authorized before a check is prepared. Checks are signed only by authorized Individuals. The bank-generated deposit slip should be compared with the check listing. The person opening the mall is not the person who maintains the accounting records. Unauthorized payments are prevented.arrow_forward
- 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_forwardRosenquist Company has the following internal control procedures over cash receipts. Identify the internal control principle that is applicable to each procedure. a. All over-the-counter receipts are entered in cash registers. Human Resource Controls Segregation of Duties Establishment of Responsibility Independent Internal Verification b. All cashiers are bonded. Documentation Procedures Physical Controls C. Daily cash counts are made by cashier department supervisors. The duties of receiving cash, recording cash, and custody of cash are assigned to d. different individuals. e. Only cashiers may operate cash registers.arrow_forwardMatch each of the following control activities with its appropriate description. 1. Assignment of responsibility 2. Segregation of duties 3. Documentation 4. Physical controls 5. Review and reconciliation (a) All transactions should include original, detailed receipts. (b) Undeposited cash should be stored in the company safe. (c) Surprise cash counts are performed by internal audit. (d) Responsibility for related activities should be assigned to specific employees. (e) Cheque signers are not allowed to record cash transactions. > > > >arrow_forward
- Each 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_forwardWhich of the following procedures would an auditor most likely perform to test controls relating to management's assertion about the completeness of cash receipts for cash sales at a retail outlet? O Inquire about employees' access to recorded but undeposited cash. O Compare the cash balance in the general ledger with the bank confirmation request. O Observe the consistency of the employees' use of cash registers and tapes. O Trace deposits in the cash receipts journal to the cash balance in the general ledger.arrow_forwardWhich of the following is a best practice when handling cash? (A) Always perform background checks on people handling cash (B) Be sure to implement a cash handling process (C) Make sure cash handling procedures are always segregated (D) All of the abovearrow_forward
- 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.arrow_forwardCase of the Missing Petty Cash The case below tells the actual story of a cash embezzlement scheme. The case has two major parts: (1) problem and (2) audit approach. For the case, please consider how the auditor may have discovered the cash embezzlement scheme.ProblemThe petty cash custodian (1) brought postage receipts from home and paid them from the fund, (2) persuaded the supervisor to sign blank authorization slips the custodian could use when the supervisor was away and used them to pay for fictitious meals and minor supplies, and (3) took cash to get through the weekend, replacing it the next week. Postagereceipts were from a distant post office station the company did not use. The blank authorization slips were dated on days the supervisor was absent. The fund was cash short during the weekend and for a few days the following week. The fund was small ($500), but the custodian replenished it about every two working days, stealing about $50 each time. With about 260 working days…arrow_forwardThe following are a list of possible errors or fraud (1 through 5) involving cash receipts and controls (a. through g.) that may prevent or detect the errors or fraud:Possible Errors or Fraud1. Customer checks are properly credited to customer accounts and are properlydeposited, but errors are made in recording receipts in the cash receipts journal.2. Customer checks are misappropriated before being forwarded to the cashier fordeposit.3. Customer checks are received for less than the customers’ full account balances, butthe customers’ full account balances are credited.4. Customer checks are credited to incorrect customer accounts.5. Different customer accounts are each credited for the same cash receipt.Internal Controlsa. Customer orders are compared with an approved customer list.b. Prenumbered credit memos are used for granting credit for returned goods.c. Remittance advices are separated from the checks in the mailroom and forwarded tothe accounting department.d. The cashier…arrow_forward
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