
Internal Control:
Internal control is a process of minimizing any operational error and financial reporting error and achieving organizations objectives.
The principles of internal control.

Answer to Problem 1DQ
Solution:
Following are the seven principles of internal control:
- Establishing responsibility.
- Maintaining adequate records.
- Insuring asset and bond key employees.
- Separating record keeping from custody of assets.
- Dividing accountability for related transaction.
- Applying technological controls.
- Performing independent and regular reviews.
Explanation of Solution
For internal control, there should be established responsibility for specific transaction so that if anything goes wrong then organization can held someone responsible or faulty. The second principle tells us to maintain adequate records of all transactions. As per the third principle, a firm needs to insure its assets against any casualty. As per the fourth principle, there should be different persons one who is controlling the asset and another who is keeping the accounting record of an asset. As per the fifth principle, there should be a division of responsibilities related to one transaction among two three employees so that an automatic check on each persons can be maintained. As per sixth principle, by adapting the technologies, we can improve the level of internal control. In last we need to perform regular reviews to make sure that everything is in aligned with the goals of the organization.
The principle of internal control helps in monitoring and verifying business activities.
Want to see more full solutions like this?
Chapter 8 Solutions
Fundamental Accounting Principles
- Larkin Manufacturing uses the FIFO method in its process costing system. The Mixing Department had $8,000 in material costs in its beginning work-in- process inventory, and $92,000 in material costs were added during the period. The equivalent units of production for materials for the period were 25,000. What is the cost per equivalent unit for materials? A) $3.68 B) $4.00 C) $3.52 D) $3.20arrow_forwardThe financial statements of SolarTech Industries report net sales of $1,350,000 and accounts receivable of $75,000 and $85,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days?arrow_forwardDon't use ai solution do fast answer of this question general accountingarrow_forward
- General accountingarrow_forwardProvide accounting answerarrow_forwardOmega Electronics recorded its highest total cost of $120,000 in September, when production volume was 22,000 units. The lowest total cost was $88,000 in March, when production volume was 12,000 units. What is the fixed cost per month?arrow_forward
- At year-end, Green Tech Inc. has cash of $20,000, current accounts receivable of $50,000, merchandise inventory of $45,000, and prepaid expenses totaling $6,500. Liabilities of $30,000 must be paid next year. Assume accounts receivable had a beginning balance of $18,000, and net credit sales for the current year totaled $1,800,000. How many days did it take Green Tech Inc. to collect its average level of receivables? (Assume 365 days/year.)arrow_forward????arrow_forwardGiven step by step explanation general accounting questionarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





