FIN ACCT W/CONNECT >CI<
3rd Edition
ISBN: 9781259397547
Author: SPICELAND
Publisher: MCG
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Question
Chapter 4, Problem 4.4E
To determine
The control activity which is violated for each scenario.
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Students have asked these similar questions
Identify the fraud triangle risk factor (Opportunity, Pressure, or Rationalization) in each situation.
1. The business has no cameras or security devices at its warehouse.
2. A worker sees other employees regularly take inventory for personal use.
3. Payroll manager feels she is greatly underpaid.
4. No one matches the cash in the register to receipts when shifts end.
5. Managers are expected to grow business or be fired.
6. Managers are told to make extreme cuts in expenses.
Opportunity
Rationalization
Pressure
Opportunity
Pressure
Pressure
Following are five separate cases involving internal control issues.
Required:
1. For each case, identify the principle(s) of internal control that is violated.
a. Chi Han receives all incoming customer cash receipts for her employer and posts the customer
payments to their respective accounts.
b. Sutton Company has two employees handling acquisitions of inventory. One employee places
purchase orders and pays vendors. The second employee receives the merchandise.
c. Ben Shales prides himself on hiring quality workers who require little supervision. As office manager,
Ben gives his employees full discretion over their tasks and for years has seen no reason to perform
independent reviews of their work.
d. At Tico Company, Julia and Trevor alternate lunch hours. Julia is the petty cash custodian, but if
someone needs petty cash when she is at lunch, Trevor fills in as custodian.
e. Nori Nozumi posts all patient charges and payments at the Hopeville Medical Clinic. Each night Nori
backs up…
Below are several scenarios related to control activities of a company.1. A manufacturing company compares total sales in the current year to those in the previous year but does not compare the cost of production.2. So that employees can have easy access to office supplies, a company keeps supplies in unlocked cabinets in multiple locations.3. At the end of each day, a single employee collects all cash received from customers, records the total, and makes the deposit at the bank.4. At the end of the year only, the company compares its cash records to the bank’s records of cash deposited and withdrawn during the year.5. A company encourages employees to call an anonymous hotline if they believe other employees are circumventing internal control features.6. All employees have the authority to refund a customer’s money.Required:For each scenario, determine which control activity is violated. Control activities include separation of duties, physical controls, proper authorization, employee…
Chapter 4 Solutions
FIN ACCT W/CONNECT >CI<
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - What is meant by the fraud triangle, and what can...Ch. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - What is meant by separation of duties?Ch. 4 - Prob. 10RQ
Ch. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - Prob. 15RQCh. 4 - Prob. 16RQCh. 4 - Prob. 17RQCh. 4 - Prob. 18RQCh. 4 - Prob. 19RQCh. 4 - Prob. 20RQCh. 4 - Prob. 21RQCh. 4 - 22.What are two primary reasons that the companys...Ch. 4 - Prob. 23RQCh. 4 - Prob. 24RQCh. 4 - Prob. 25RQCh. 4 - Prob. 26RQCh. 4 - Prob. 27RQCh. 4 - Describe the operating, investing, and financing...Ch. 4 - Prob. 29RQCh. 4 - Prob. 30RQCh. 4 - Prob. 4.1BECh. 4 - Match each of the following components of internal...Ch. 4 - Prob. 4.3BECh. 4 - Prob. 4.4BECh. 4 - During the year, the following sales transactions...Ch. 4 - Prob. 4.6BECh. 4 - Prob. 4.7BECh. 4 - Prob. 4.8BECh. 4 - Prob. 4.9BECh. 4 - Prob. 4.10BECh. 4 - Prob. 4.11BECh. 4 - Prob. 4.12BECh. 4 - Prob. 4.13BECh. 4 - Prob. 4.14BECh. 4 - Prob. 4.15BECh. 4 - On January 12, Ferrell Incorporated obtains a...Ch. 4 - Prob. 4.17BECh. 4 - Prob. 4.18BECh. 4 - Prob. 4.1ECh. 4 - Prob. 4.2ECh. 4 - Prob. 4.3ECh. 4 - Prob. 4.4ECh. 4 - Below are several amounts reported at the end of...Ch. 4 - Prob. 4.6ECh. 4 - Prob. 4.7ECh. 4 - Prob. 4.8ECh. 4 - Prob. 4.9ECh. 4 - Prob. 4.10ECh. 4 - Prob. 4.11ECh. 4 - Prob. 4.12ECh. 4 - Prob. 4.13ECh. 4 - Prob. 4.14ECh. 4 - Prob. 4.15ECh. 4 - Below are cash transactions for Goldman...Ch. 4 - Prob. 4.17ECh. 4 - Prob. 4.18ECh. 4 - Consider the following information: 1.Service...Ch. 4 - Prob. 4.20ECh. 4 - Prob. 4.1APCh. 4 - Prob. 4.2APCh. 4 - Prob. 4.3APCh. 4 - Prob. 4.4APCh. 4 - Prob. 4.5APCh. 4 - Prob. 4.1BPCh. 4 - Prob. 4.2BPCh. 4 - Prob. 4.3BPCh. 4 - Prob. 4.4BPCh. 4 - Prob. 4.5BPCh. 4 - Prob. 4.1APCPCh. 4 - Prob. 4.2APFACh. 4 - Prob. 4.3APFACh. 4 - Prob. 4.4APCACh. 4 - Prob. 4.5APECh. 4 - Prob. 4.7APWC
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- Following are five separate cases involving internal control issues. a. Tywin Company keeps very poor records of its equipment. Instead, the company asserts its employees are honest and would never steal from the company. b. Marker Theater has a computerized order-taking system for its tickets. The system is backed up once a year. c. Sutton Company has two employees handling acquisitions of inventory. One employee places purchase orders and pays vendors. The second employee receives the merchandise. d. The owner of Super Pharmacy uses a check software/printer to prepare checks, making it difficult for anyone to alter the amount of a check. The check software/printer, which is not password protected, is on the owner’s desk in an office that contains company checks and is normally unlocked. e. To ensure the company retreat would not be cut, the manager of Lavina Company decided to save money by canceling the external audit of internal controls. Required 1. For each case, identify the…arrow_forwardEmployee theft is the largest "expense" of a business in this country. The key to implementing controls is to determine the right amount. It is important to weigh the cost and benefit of each control. For example, if a company wishes to install security cameras to deter theft however it will cost $20,000 and would be expected to reduce theft less than that then the company may want to consider other options. Knowing that, what controls might be in place to avoid an executive making a decision that would personally benefit him?arrow_forward12 To save time, the employer should ask the wage earners to keep a record of 11. Keeping personnel files in a locked filing cabinet is a corrective control. 7. A blank cheque can be signed to replenish the petty cash fund if it is 6. Cheque books should be kept in a locked safe as a preventive control. 5. Bank reconciliation statements need only be drawn up every six months. In order to be efficient, all employees should have direct access to 3. A good internal control procedure is where the same person is responsible for paying all accounts, writing all cheques and signing all cheques. 2. All payments should be made by cheque, except for petty cash payments. Read the following statements about internal controls. Write down the number should be re pared w 10. Any employee of a business should be able to buy assets for the business. All cash receipts should be stored in the cash register and deposited at the 1. Internal controls are not required when payments are made by cheque. of…arrow_forward
- Listed below are five procedures followed by Gilmore Company.Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated. Use the table below. Procedure IC Good or Weak? Related Internal Control Principle 1. Employees are required to take vacations. Select a weakness in internal control GoodWeak Select a control principle that is violated Independent Internal VerificationSegregation of DutiesEstablishment of ResponsibilityPhysical ControlsHuman Resource ControlsDocumentation Procedures 2. Any member of the sales department can approve credit sales. Select a weakness in internal control…arrow_forwardListed below are five procedures followed by Gilmore Company.Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated. Use the table below. Procedure IC Good or Weak? Related Internal Control Principle 1. Employees are required to take vacations. Select a weakness in internal control GoodWeak Select a control principle that is violated Human Resource ControlsIndependent Internal VerificationEstablishment of ResponsibilityPhysical ControlsSegregation of DutiesDocumentation Procedures 2. Any member of the sales department can approve credit sales. Select a weakness in internal control WeakGood Select a control principle that is violated Segregation of DutiesDocumentation ProceduresEstablishment…arrow_forwardFollowing are five separate cases involving internal control issues. Required: 1. For each case, identify the principle(s) of internal control that is violated. a. Marker Theater has a computerized order-taking system for its tickets. The system is backed up once a year. b. Sutton Company has two employees handling acquisitions of inventory. One employee places purchase orders and pays vendors. The second employee receives the merchandise. C. To ensure the company retreat would not be cut, the manager of Lavina Company decided to save money by canceling the external audit of internal controls. d. Tywin company keeps very poor records of its equipment. Instead, the company asserts its employees are honest and would never steal from the company. The owner of Super Pharmacy uses a check software/printer to prepare checks, making it difficult for e. anyone to alter the amount of a check. The check software/printer, which is not password protected, is on the owner's desk in an office that…arrow_forward
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