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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Exercise 4-41 Classifying Internal Control Procedures

Required:

Match each 01 the control procedures listed below with the most closely related control procedures type. Your answer should pair each of the numbers 1 through 10 with the appropriate letter.

Control Procedure Type:

a. Adequate documents and records

b. Checks on recorded amounts

c. Clearly defined authority and responsibility

d. Safeguards over assets and records

e. Segregation of duties

Control Procedures

  1. Only the cashier assigned to the cash register is allowed to perform transactions.
  2. Division managers are evaluated annually on the basis of their division’s profitability.
  3. Invoices received from outside suppliers are filed with purchase orders.
  4. Employees with access to the accounting records are not permitted to open the mail because it contains many payments by check from customers.
  5. The extent of access to the many segments of the company’s computer system is tightly controlled by individual identification cards and passwords that change at regular intervals.
  6. Each shipment to customers from inventory is recorded on a specially printed form bearing a sequential number; these forms are the basis for entries intel the computer system, which makes entries to inventory records and produces periodic reports of sales and shipments.
  7. At regular intervals, internal audit reviews a sample of expenditure transactions to determine that payment has been made to a bona fide supplier and that the related goods or services were received and appropriately used.
  8. A construction company stores large steel girders in an open yard surrounded by a 5-foot fence and stores welding supplies in a controlled-access, tightly secured concrete building.
  9. Cash registers display the price of each item purchased to the customer as it is recorded and produce a customer receipt that describes each item and gives its price.
  10. The person in the controller’s office who prepares and mails checks to suppliers cannot make entries in the general ledger system.

To determine

Concept Introduction:

Internal Control:

Internal controls are policies and procedures implemented by an organization to attain operational goals and maintain the integrity of accounting. Internal Control system has its five integral components those together works an effective internal control.

To Indicate:

The Correct match for each of the given term with the definition or example.

Explanation

Internal controls are policies and procedures implemented by an organization to attain operational goals and maintain the integrity of accounting. Internal Control system has its five integral components those together works an effective internal control.

The Correct match for each of the given term with the definition or example is explained as follows:

    Control ProcedureType
    1eRestricting the cash handling to one person is procedure of Segregation of duties
    2c.Checking manager’s responsibility is a procedure of clearly defining the authority and responsibilities
    3a.Collecting Invoices and making records is procedure of Adequate documentation and record.
    4d.Restricting the computer access is procedure of safeguarding the assets and records
    5d...

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