A voucher system is a set of procedures and approvals: Multiple Choice Designed to control cash payments and the acceptance of liabilities. Designed to eliminate the need for subsidiary ledgers. Designed to determine if the company is operating profitably. Used to ensure that the company sells on credit only to creditworthy customers. Used almost exclusively by small companies.

A voucher system is a set of procedures and approvals: Multiple Choice Designed to control cash payments and the acceptance of liabilities. Designed to eliminate the need for subsidiary ledgers. Designed to determine if the company is operating profitably. Used to ensure that the company sells on credit only to creditworthy customers. Used almost exclusively by small companies.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 16CYBK

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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.
A bank reconciliation takes time and must balance. An employee was struggling in balancing the bank reconciliation. Her supervisor told her to plug (make an unsupported entry for) the difference, record to Miscellaneous Expense, and simply move on. Discuss the internal controls problem with this directive.
Assume you are considering an entity’s internal controls over credit sales and cash collection. System documentation was accomplished through a questionnaire and written narratives and, in conjunction with a transaction walk-through, revealed the following potential weaknesses in internal control, some of which, depending on their severity, could prompt you to set control risk at the maximum. a. New customers are not approved before ordered good are shipped. b. Sales prices vary from customer to custom. c. No approval is required for returned goods from customers. d. Subsidiary accounts receivable records do not always agree with the general ledger control account. e. Blank checks are left unprotected in an unlocked safe. Required: For each potential weakness, indicate a control or controls that management could implement to reduce the likelihood of errors or frauds. Case 4 (Adapted) During your audit of Grace Company’s December 31, 2013 financial…
Which of the following statements is correct? Select one: a. Account receivable turnover is equal to net credit sales divided by average net accounts receivable. b. Buying aged receivables from businesses and then collects the payments directly from the customers is called Allowance for uncollectible accounts. c. Auto generated document numbers is a fraud preventive method which is more efficient than physical controls. d. If the same people are responsible for a series of related accounting activities is called Segregation of Duties.
Which of the following generally would not be considered good internal control of cash receipts? a. Allowing customers to pay with a debit card. b. Requiring the employee receiving the cash from the customer to also deposit the cash into the company’s bank account. c. Recording cash receipts as soon as they are received. d. Allowing customers to pay with a credit card.
With good internal controls, the person who handles cash can also a. account for cash payments. b. account for cash receipts from customers. c. issue credits to customers for sales returns. d. None of the above
Segregation of Duties (SOD) is a basic building block of sustainable risk management and internal controls for a business. Which of the following statements is not a segregation of duties violation?A. The duties of Internal IT Developer of company is to write application programs and then perform required program maintenance when a problem occurs.B. The payroll administrator is distributing payroll checks to employees and recording cash receipts in the journal under supervision.C. The accounting clerk who recording cash receipts in the journal in the general ledger performs bank reconciliation to compare if there are any differences between cash transactions.D. The inventory warehouse clerk task is to maintain the inventory records with custody of physical assets inventory to manage asset identification, location and condition Explain why you choose your answer, and not the other (in max 200 words)
Which one of the following statements is true? a.Good cash management practices dictate that a company should maintain as large a balance as possible in its cash account. b.Petty cash can be substituted for a chequing account to expedite the payment of all disbursements. c.The person handling the cash should also prepare the bank reconciliation. d.Sound internal control practice dictates that cash disbursements be made by cheque, unless the disbursement is very small.
Answer the following questions about internal control over cash payments:1. Payment by check includes three controls over cash. What are they?2. Suppose a purchasing agent receives the goods that she purchases and also approves payment for those goods. How could a dishonest purchasing agent cheat the company? Howdo companies avoid this internal control weakness?
Each situation below describes an internal control weakness in the cash payments process. Identifywhich of the five internal control principles is violated, explain the weakness, and then suggest achange that would improve internal control.a. The warehouse clerk is responsible for ordering inventory when levels become low and advising the accounting department to issue a payment to the supplier when ordered goods arereceived.b. For each purchase, the accountant compares the purchase order (prepared by the purchasing manager) to the receiving report (prepared by warehouse employees) and then attachesthese documents to the corresponding supplier invoice and files them by supplier name. Theaccountant then prepares a check, which the owner merrily signs and sends to the mail clerkfor mailing.c. The check-signing machine is stored with a supply of blank checks in the lunch room closet.d. Purchase orders can be approved by the purchasing manager, accountant, or warehouse supervisor,…
Which of the following scenarios reduces the risk of an employee fraud? Group of answer choices An accountant being responsible for approving payments to a vendor The bank reconciliation being prepared by an accountant Remittance advices being sent directly to the cashier A sales clerk having access to the cash register
With good internal controls, the person who handles cash can also Account for cash payments. Account for cash receipts from customers. Issue credits to customers for sales returns. None of the above