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Instructions (a) For each procedure, explain the weakness in anternal control and iden ify the control principle that is violated (b) For each weakness, suggesta charze in the procedure that will resuit in good interua. control. E7-4 The following control procedures are used in Eunny's Boutique Shoppe for cash disbursements. res 1. Each week, 100 company checks are left in an unmarked envelove on a shelf behind the cash register. 2. The store manager personally approves all payments before she signs and issues checks. 3. The store purchases used goods for resale from people that bring items to the store. Since that can occur anytime that the store is open, all employees are authorized to purchase goods for resale by disbursing cash from the register. The purchase is docu- mented by having the store employee write on a piece of paper a description of the item that was purchased and the amount that was paid. The employee then signs the paper and puts it in the register. 4. After payment, bills are "filed" in a paid invoice folder. 5. The company accountant prepares the bank reconciliation and reports any discrepan- cies to the owner. Instructions (a) For each procedure, explain the weakness in internal control and identify the internal control principle that is violated. (b) For each weakness, suggest a change in the procedure that will result in good internal control. it red

Instructions (a) For each procedure, explain the weakness in anternal control and iden ify the control principle that is violated (b) For each weakness, suggesta charze in the procedure that will resuit in good interua. control. E7-4 The following control procedures are used in Eunny's Boutique Shoppe for cash disbursements. res 1. Each week, 100 company checks are left in an unmarked envelove on a shelf behind the cash register. 2. The store manager personally approves all payments before she signs and issues checks. 3. The store purchases used goods for resale from people that bring items to the store. Since that can occur anytime that the store is open, all employees are authorized to purchase goods for resale by disbursing cash from the register. The purchase is docu- mented by having the store employee write on a piece of paper a description of the item that was purchased and the amount that was paid. The employee then signs the paper and puts it in the register. 4. After payment, bills are "filed" in a paid invoice folder. 5. The company accountant prepares the bank reconciliation and reports any discrepan- cies to the owner. Instructions (a) For each procedure, explain the weakness in internal control and identify the internal control principle that is violated. (b) For each weakness, suggest a change in the procedure that will result in good internal control. it red

Century 21 Accounting General Journal
Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter5: Cash Control Systems
Section5.3: Dishonored Checks And Electronic Banking
Problem 1WT
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Instructions (a) For each procedure, explain the weakness in anternal control and iden ify the control principle that is violated (b) For each weakness, suggesta charze in the procedure that will resuit in good interua. control. E7-4 The following control procedures are used in Eunny's Boutique Shoppe for cash disbursements. res 1. Each week, 100 company checks are left in an unmarked envelove on a shelf behind the cash register. 2. The store manager personally approves all payments before she signs and issues checks. 3. The store purchases used goods for resale from people that bring items to the store. Since that can occur anytime that the store is open, all employees are authorized to purchase goods for resale by disbursing cash from the register. The purchase is docu- mented by having the store employee write on a piece of paper a description of the item that was purchased and the amount that was paid. The employee then signs the paper and puts it in the register. 4. After payment, bills are "filed" in a paid invoice folder. 5. The company accountant prepares the bank reconciliation and reports any discrepan- cies to the owner. Instructions (a) For each procedure, explain the weakness in internal control and identify the internal control principle that is violated. (b) For each weakness, suggest a change in the procedure that will result in good internal control. it red
Transcribed Image Text:Instructions (a) For each procedure, explain the weakness in anternal control and iden ify the control principle that is violated (b) For each weakness, suggesta charze in the procedure that will resuit in good interua. control. E7-4 The following control procedures are used in Eunny's Boutique Shoppe for cash disbursements. res 1. Each week, 100 company checks are left in an unmarked envelove on a shelf behind the cash register. 2. The store manager personally approves all payments before she signs and issues checks. 3. The store purchases used goods for resale from people that bring items to the store. Since that can occur anytime that the store is open, all employees are authorized to purchase goods for resale by disbursing cash from the register. The purchase is docu- mented by having the store employee write on a piece of paper a description of the item that was purchased and the amount that was paid. The employee then signs the paper and puts it in the register. 4. After payment, bills are "filed" in a paid invoice folder. 5. The company accountant prepares the bank reconciliation and reports any discrepan- cies to the owner. Instructions (a) For each procedure, explain the weakness in internal control and identify the internal control principle that is violated. (b) For each weakness, suggest a change in the procedure that will result in good internal control. it red
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