Answered: ABC company is a start-up company, they…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter8: Fraud, Internal Controls, And Cash

Section: Chapter Questions

Problem 5MC: There are several elements to internal controls. Which of the following would not address the issue...

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ABC company is a start-up company, they only have less than 20 personnel. The
treasury function maintains the custody of funds, investments and the record-keeping
of cash and investment related transactions. Which of the following compensatory
control should be employed in the absence of segregation of duties?

A. The treasurer handling the transaction should periodically reconcile the cash book and
investment records.
B. The transactions should be properly authorized by the CFO.
C. An accounting supervisor should review the cash and investment related entries posted in the company's books.
D. The treasurer should maintain the certificates of investments in a safety deposit box.

Definition Definition Financial journal in which only cash-related transactions are recorded. Cash transactions are posted chronologically in the cash book, which is also called a subsidiary book. All the cash receipts are recorded on the debit side and all the cash payments are recorded on the credit side. An important point to remember is that the cash book never shows a credit balance; only a debit balance is shown in the cash book.

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