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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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Case 4-62 Ethics and Cash Controls

You have just been hired as a part-time clerk in a large department store) Each week you work three evenings and all day Saturday. Without the income provided by this job, you would be unable to stay in college Charles Riley, the manager in the clothing department to which you are assigned, has worked for the store for many years. Managers receive both a salary and a commission on their sales.

Late one afternoon, just as you begin work Mr. Riley is ringing up a purchase. You observe that the purchase consists of two expensive suits. a coat and several pairs of trousers and that the customer declines Mr. Riley’s offer to have the store’s tailor do the alterations. After the customer departs with his merchandise and as ML Riley is departing for the evening, you say, “See you tomorrow.” Mr. Riley gives a brief, barely audible response and departs for the evening;

As you return to the sales counter, you glance at the paper tape displayed through a small opening in the cash register that records all sales on an item-July-item basis. You have just completed the store course in register operation. So you are quite familiar with the register and the tape it produces. To your surprise, you note that the last sale consisted of just a single pair of trousers.

Required:

2. What are the possible consequences for the store for Mr. Riley, and for you personally of reporting your observations to Mr. Riley’s superiors?

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 possible consequences of the case for the store, the manager and you for reporting the observation to Mr Relay’s superiors.

Explanation

The given case belongs to a cash theft transaction where the store manager has sold larger number of inventory but has recorded only few items in the sale.

In the given case the store manager Mr. Riley Sold two expensive coats, a coat, and several pairs of trousers to a customer but in the sale...

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