
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Petty Cash is easily misappropriated if business processes and internal controls are not established and enforced. Provide and explain a minimum of four controls and/or concepts that will help a company ensure that its petty cash accounts are appropriately used and safeguarded?
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- At Radiant, Inc., the sales department is also responsible for recording cash transactions as it does not have a separate accounting department. Which internal control procedure needs strengthening? A. separation of duties B. competent, reliable, and ethical personnel C. assignment of responsibilities D. documentsarrow_forwardDetermine whether each procedure described below is an internal control strength or weakness; then identify the internal control violated or followed for each procedure. 1. The owner does not use ID scanners to limit access to expensive merchandise. Instead, the owner argues they hire honest employees. 2. Several salesclerks share the same cash drawer. 3. The company devotes resources towards keeping accurate accounting records for machinery. 4. The company does not allow employees with access to cash to modify accounting records. 5. Employees that handle easily transferable assets such as cash are bonded. Weakness or Strength 1. Weakness 2. Weakness 3. Strength 4. Strength 5. Strength Internal Control Principlearrow_forwardWhat is a appropriate control procedures that would have prevented or detected the theft of cash in a business.arrow_forward
- Answerarrow_forwardDescribe the nature of a bank account and its use in controlling cash. A major reason that companies use bank accounts is for internal control. Some of the control advantages of using bank accounts are as follows: 1. Bank accounts reduce the amount of cash on hand. 2. Bank accounts provide an independent recording of cash transactions. Reconciling the balance of the cash account in the company's records with the cash balance according to the bank is an important control. 3. Use of bank accounts facilitates the transfer of funds using EFT systems. DELLarrow_forwardA serious exposure in the revenue cycle is customer dissatisfaction. What is the related threat and applicable control procedure that address this exposure? A. failure to bill; separation of billing and shipping functions B. failure to bill; bar-codes and RFID technology C. billing errors; reconciliation of shipping documents to sales order D. theft of cash; using ETFsarrow_forward
- Whole Fruits Market took the following actions to improve internal controls. For each of the following actions, identify the internal control principle the company followed. a. Prohibit the recordkeeper from having control over cash. b. Purchased an insurance (bonding) policy against losses from theft by a cashier. c. Each cashier is designated a specific cash drawer and is solely responsible for cash in that drawer. d. Detailed records of inventory are kept to ensure items lost or stolen do not go unnoticed. e. Digital time clocks are used to register which employees are at work at what times. f. External auditors are regularly hired to evaluate internal controls.arrow_forwardIn the case of The Canny Cashier, name one control that could have revealed signs of the embezzlement.arrow_forwardWhich internal control activity is being violated when the cashier in a retail store also records the daily receipts in a journal? adequate documents and records safeguards over assets and records independent checks on recorded amounts segregation of dutiesarrow_forward
- Why do organizations have policies regarding the use of assets and why do staff need to be aware of them and other organizational policies, procedures and accounting standards? Internal control is enhanced by combining the control of a transaction with the record-keeping function.a.True.b. False. For efficiency of operations and better control over cash, a company should maintain only one bank account. i. True. ii. False.arrow_forwardCollusion is an intentional act of two or more employees to accomplish theft of company assets. Which control activity is designed to make fraud less likely because it would require collusion among employees? A. Adequate documents and records B. Clearly defined authority and responsibility C. Safeguards over assets and records D. Segregation of dutiesarrow_forwardWhich of the following reflects a weak internal control system? Please explain with full explanation. a. All employees are well supervised. b. A single employee is responsible for comparing a receiving report to an invoice. c. All employees must take their vacations. d. A single employee is responsible for collecting and recording cash.arrow_forward
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