Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
6th Edition
ISBN: 9780134486840
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Question
Chapter 7, Problem 4QC
To determine
Separation of Duties
This is the internal control principle which reduces the possibilities of money embezzlement, by separating the responsibilities of employees. This ensures that the employees working in related jobs will not interfere with other employees’ responsibilities.
The following are the two applications of segregation of duties:
- 1. The related responsibilities should be shuffled and given to the employees who are not related. This application eliminates the possibility of fraud due to separation of responsibilities.
- 2. The custodian of asset should not be made responsible for accounting records or accounting department. This avoids the interference of custodians with the book-keeping responsibility, and keeps fraud at bay.
To determine: The importance of separation of duties
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Students have asked these similar questions
Internal controls associated with the purchases and cash disbursements cycle include:
A
Separation of duties.
B
Adequate documentation.
C
Both separation of duties and adequate documentation.
D
Neither separation of duties nor adequate documentation.
As part of a strong internal control system, which of the following accounting duties needsto be separated from cash handling?a. Record keepingb. Filingc. Transaction approvald. Both a and c need to be separated from cash handling.
What are the steps in approach to internal control over cash receipts that utilizes separation of duties?
Chapter 7 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Ch. 7 - Prob. 1QCCh. 7 - Prob. 2QCCh. 7 - Prob. 3QCCh. 7 - Prob. 4QCCh. 7 - Prob. 5QCCh. 7 - Prob. 6QCCh. 7 - Prob. 7QCCh. 7 - Prob. 9QCCh. 7 - Prob. 10QCCh. 7 - Prob. 11QC
Ch. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - What are the five components of internal control?...Ch. 7 - Prob. 4RQCh. 7 - What is separation of duties?Ch. 7 - Prob. 6RQCh. 7 - Prob. 7RQCh. 7 - Prob. 8RQCh. 7 - How do businesses control cash receipts by mail?Ch. 7 - Prob. 10RQCh. 7 - Prob. 11RQCh. 7 - Prob. 12RQCh. 7 - Prob. 14RQCh. 7 - Prob. 15RQCh. 7 - Prob. 16RQCh. 7 - Prob. 17RQCh. 7 - Prob. 18RQCh. 7 - Defining internal control Internal controls are...Ch. 7 - Prob. 7.2SECh. 7 - Prob. 7.3SECh. 7 - Prob. 7.4SECh. 7 - Prob. 7.5SECh. 7 - Prob. 7.7SECh. 7 - Prob. 7.8SECh. 7 - Prob. 7.9SECh. 7 - Prob. 7.10SECh. 7 - Prob. 7.11SECh. 7 - Prob. 7.12ECh. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Evaluating internal control over cash payments...Ch. 7 - Understanding internal control, components,...Ch. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.20ECh. 7 - Prob. 7.21ECh. 7 - Prob. 7.23APCh. 7 - Prob. 7.24APCh. 7 - Prob. 7.25APCh. 7 - Prob. 7.26APCh. 7 - Prob. 7.27APCh. 7 - Prob. 7.28APCh. 7 - Prob. 7.29BPCh. 7 - Prob. 7.30BPCh. 7 - Prob. 7.31BPCh. 7 - Prob. 7.32BPCh. 7 - Prob. 7.33BPCh. 7 - Prob. 7.34BPCh. 7 - Prob. 7.2DCCh. 7 - Levon Helm was a kind of one-man mortgage broker....Ch. 7 - Prob. 7.1CA
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Similar questions
- What is the purpose of the following control procedures (i.e., what threats is it designed to mitigate)? c. Direct deposit of paychecks.arrow_forwardWhy is the separation of duties control so important with cash?arrow_forwardWhich statement is NOT correct for an expenditure system with proper internal controls?a. Cash disbursements maintain the check register.b. Accounts payable maintains the accounts payable subsidiary ledger.c. Accounts payable is responsible for paying invoices.d. Accounts payable is responsible for authorizing invoices.arrow_forward
- The internal control feature specific to petty cash is A. separation of duties B. assignment of responsibility C. proper authorization D. Imprest Systemarrow_forward1. An effective system of internal control requires segregation of basic functions. Which three of the following functions should ideally be segregated? Explain details A. Authorisation of orders B. Recording cash receipts on receivables ledger C. Invoicing D. Credit control E. Reconciliation of receivables ledger with receivables ledger control accountarrow_forwardWhich of the following assets require the strongest of internal controls? A. inventory B. credit cards C. computer equipment D. casharrow_forward
- With regard to segregation of duties, rule one is that transaction authorization and transaction processing should be separated. What does this require in the revenue cycle? Please answer this. Thank youarrow_forwardTh e assumption that the eff ects of transactions and other events are recognized when they occur, not when the cash fl ows occur, is called: A . relevance.arrow_forwardis a practice of transfering the ownership of a negotiable instrument such as a check by a payee to another. a. discounting b. bartering c. endorsing O d. signingarrow_forward
- Keeping cash locked away is an example of which control activity? a. Authorization b. Performance reviews • c. Physical control d. Segregation of dutiesarrow_forwardThe following are the parties involved in a transaction that uses check as medium of exchange except a. Debitor b. Drawee c. Drawerarrow_forwardA type of impropriety that is hard to find is cheating that comes from:a. More transaction presentationb. Transactions are not recordedc. Transactions are recorded on subsidiary companiesd. Receivables from related partiesarrow_forward
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