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Listed below are seven errors or problems that might occur in the processing of cash transactions. Also shown is a list of internal control principles. Evaluate each possible error and cite a principle that is listed that would reduce the probability of the error occurring. If none of the principles given will correct the problem, write "None." If you think more than one principle is appropriate, list all principles that apply. Internal Control Principles a. b. C. d. e. f. Establishment of responsibility Segregation of duties Physical control devices Documentation procedures Independent internal verification. Human resource controls

Listed below are seven errors or problems that might occur in the processing of cash transactions. Also shown is a list of internal control principles. Evaluate each possible error and cite a principle that is listed that would reduce the probability of the error occurring. If none of the principles given will correct the problem, write "None." If you think more than one principle is appropriate, list all principles that apply. Internal Control Principles a. b. C. d. e. f. Establishment of responsibility Segregation of duties Physical control devices Documentation procedures Independent internal verification. Human resource controls

Auditing: A Risk Based-Approach (MindTap Course List)
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 24CYBK
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Listed below are seven errors or problems that might occur in the processing of cash transactions. Also shown is a list of internal control principles. Evaluate each possible error and cite a principle that is listed that would reduce the probability of the error occurring. If none of the principles given will correct the problem, write "None." If you think more than one principle is appropriate, list all principles that apply. Internal Control Principles Establishment of responsibility Segregation of duties Physical control devices Documentation procedures e. Independent internal verification a. b. C. d. f. Human resource controls
Transcribed Image Text:Listed below are seven errors or problems that might occur in the processing of cash transactions. Also shown is a list of internal control principles. Evaluate each possible error and cite a principle that is listed that would reduce the probability of the error occurring. If none of the principles given will correct the problem, write "None." If you think more than one principle is appropriate, list all principles that apply. Internal Control Principles Establishment of responsibility Segregation of duties Physical control devices Documentation procedures e. Independent internal verification a. b. C. d. f. Human resource controls
1. 2. 3. 4. 5. 6. 7. Possible Errors or Problems An employee steals the cash collected from a customer for an account receivable and conceals this theft by issuing a credit memorandum indicating that the customer returned the merchandise. A small fire destroys 3 days of cash receipts. The official designated to sign checks is able to steal blank checks and issue them without fear of detection. A salesclerk in serving customers often rings up a sale for less than the actual amount and then keeps the additional cash collected from the customer. Three cashiers use one cash register drawer and the cash in the drawer is often short of the balance kept on hand. Each cashier counts his own register drawer each day and verbally reports the results to the supervisor. Cashiers with over 5-years experience are not bonded. Internal Control Principles
Transcribed Image Text:1. 2. 3. 4. 5. 6. 7. Possible Errors or Problems An employee steals the cash collected from a customer for an account receivable and conceals this theft by issuing a credit memorandum indicating that the customer returned the merchandise. A small fire destroys 3 days of cash receipts. The official designated to sign checks is able to steal blank checks and issue them without fear of detection. A salesclerk in serving customers often rings up a sale for less than the actual amount and then keeps the additional cash collected from the customer. Three cashiers use one cash register drawer and the cash in the drawer is often short of the balance kept on hand. Each cashier counts his own register drawer each day and verbally reports the results to the supervisor. Cashiers with over 5-years experience are not bonded. Internal Control Principles
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