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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Problem 4-5?A Internal Control for Cash

After comparing cash register tapes with inventory records. the accountant for Banning Convenience Stores is concerned that someone at one of the stores is not recording some of that store’s cash sales and is stealing the cash from the unreported sales.

Required:

1. CONCEPTUAL CONNECTION Explain why.r a comparison of sales and inventory records would reveal a situation in which cash sales are not being recorded and cash from those sales is being stolen.

2. CONCEPTUAL CONNECTION Describe haw an employee might be able to steal cash from sales.

3. CONCEPTUAL CONNECTION What internal control procedures would you recommend to make the theft you described in Requirement 2 more difficult?

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.

Requirement-1:

To Indicate:

The reason how cash theft can be identified using the sales and inventory records.

Explanation

A cash theft can be identified using the sales and inventory records by comparing the sales quantity with the inventory sold quantity...

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.

Requirement-2:

To Indicate:

How an employee can be able to steal cash from sales.

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.

Requirement-3:

To Indicate:

A control procedure to prevent the theft of cash by the employees.

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