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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 4-64 Internal Controls for Cash Disbursements

Campus Supply Store purchases merchandise on credit from a large number of supplier’s During the past 5 years, Campus’s annual sales have grown from $00,000 to $l,500,000. A recent article in the local newspaper disclosed that an employee of another firm had been arrested for embezzling funds from his employer by diverting payments for purchases to his own bank account. Because of that article. The accountant for Campus has decided to examine Campus’s procedures for purchases and payables.

Currently three different employees are authorized to order merchandise for the store These employees normally complete paperwork provided by the suppliers’ sales representatives, keeping a copy for their records’ When the ordered merchandise arrives. whomever the delivery person can locate signs for the package. Bills are sent to the store by suppliers and are paid by Campus’s accountant when due.

Required:

Indicate which general principles of internal control are violated by Campus’s procedures for purchases and payables.

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 internal control practices violated by the Campus procedure for purchase and payables.

Explanation

The internal control practices violated by the Campus procedure for purchase and payables is the authorization of payment...

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