Financial Accounting, Student Value Edition (5th Edition)
Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Chapter 6, Problem 10SE
To determine

Find the missing internal control activity in the given situations.

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Identifying internal controls Consider each situation separately. Identify the missing internal control procedure from these characteristics: Assignment of responsibilities Separation of duties Audits Electronic devices Other controls (specify) a. While reviewing the records of Quality Pharmacy, you find that the same employee orders merchandise and approves invoices for payment. b. Business is slow at Amazing Amusement Park on Tuesday, Wednesday, and Thursday nights. To reduce expenses, the business decides not to use a ticket taker on those nights. The ticket seller (cashier) is told to keep the tickets as a record of the number sold. c. The same trusted employee has served as a cashier for 12 years. d. When business is brisk, Fast Mart deposits cash in the bank several times during the day. The manager at one store wants to reduce the time employees spend delivering cash to the bank, so he starts a new policy. Cash will build up over weekends, and the total will be deposited on…
Selection of Effective Extended Procedures. The following lettered items are some “suspicions,” and you have been requested to select some effective procedures designed to confirmor repudiate the suspicions.a. The custodian of the petty cash fund may be removing cash on Friday afternoon to payfor weekend activities.b. A manager noticed that eight new vendors had been added to the purchasing department’s approved list after the assistant purchasing agent was promoted to purchasingmanager three weeks ago. The manager suspects all or some of them might be fictitiouscompanies set up by the new purchasing manager.c. The payroll supervisor may be stealing unclaimed paychecks of people who quit workand do not pick up the last check.d. Although no customers have complained, cash collections on accounts receivable aredown. The counter clerks may have stolen customers’ payments.e. The cashier may have “borrowed” money, covered it by holding each day’s deposit untilcash from the next day(s)’s…
Select Effective Extended Procedures. The following are some “suspicions”; you have been requested to select some effective extended procedures designed to confirm or deny the suspicions.Required:Write the suggested procedures for each case in definite terms so another person can know what to do.a. The custodian of the petty cash fund may be removing cash on Friday afternoon to pay for weekend activities.b. A manager noticed that eight new vendors were added to the purchasing department’s approved vendor list after the assistant purchasing agent was promoted to chief agent three weeks ago. She suspects all or some of them might be fictitious companies set up by the new chief purchasing agent.c. The payroll supervisor may be stealing unclaimed paychecks of employees who resigned and did not collect their last check.d. Although no customers have complained, cash collections on accounts receivable have decreased, and the counter clerks may have stolen customers’ payments.e. The cashier…
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