Internal Controls Faith Cassen has recently been hired as the manager of Gibraltar Coffee Shop. Gibraltar Coffee Shop is a national chain of franchised coffee shops. During her first month as store manager, Faith encountered the following internal control situations: A. Faith caught an employee putting a case of 1,000 single-serving tea bags in his car. Not wanting to create a scene, Faith smiled and said, “I don’t think you’re putting those tea bags on the right shelf. Don’t they belong inside the coffee shop?”The employee returned the tea bags to the stockroom. B. Gibraltar Coffee Shop has one cash register. Prior to Faith’s joining the coffee shop, each employee working on a shift would take a customer order, accept payment, and then prepare the order. Faith made one employee on each shift responsible for taking orders and accepting the customer’s payment. Other employees prepare the orders. C. Because only one employee uses the cash register, that employee is responsible for counting the cash at the end of the shift and verifying that the cash in the drawer matches the amount of cash sales recorded by the cash register. Faith expects each cashier to balance the drawer to the penny every time—no exceptions. State whether you agree or disagree with Faith’s method of handling each situation and explain your answer.

BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307
BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307

Solutions

Chapter
Section
Chapter 7, Problem 7.2EX
Textbook Problem

Internal Controls

Faith Cassen has recently been hired as the manager of Gibraltar Coffee Shop. Gibraltar Coffee Shop is a national chain of franchised coffee shops. During her first month as store manager, Faith encountered the following internal control situations:

A. Faith caught an employee putting a case of 1,000 single-serving tea bags in his car. Not wanting to create a scene, Faith smiled and said, “I don’t think you’re putting those tea bags on the right shelf. Don’t they belong inside the coffee shop?”The employee returned the tea bags to the stockroom.

B. Gibraltar Coffee Shop has one cash register. Prior to Faith’s joining the coffee shop, each employee working on a shift would take a customer order, accept payment, and then prepare the order. Faith made one employee on each shift responsible for taking orders and accepting the customer’s payment. Other employees prepare the orders.

C. Because only one employee uses the cash register, that employee is responsible for counting the cash at the end of the shift and verifying that the cash in the drawer matches the amount of cash sales recorded by the cash register. Faith expects each cashier to balance the drawer to the penny every time—no exceptions.

State whether you agree or disagree with Faith’s method of handling each situation and explain your answer.

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Chapter 7 Solutions

Financial & Managerial Accounting
Ch. 7 - Internal control element Identify each of the...Ch. 7 - Internal control elements Identify each of the...Ch. 7 - Items on company's bank statement The following...Ch. 7 - Items on companys bank statement The following...Ch. 7 - Bank reconciliation The following data were...Ch. 7 - Bank reconciliation The following data were...Ch. 7 - Petty cash fund Prepare journal entries for each...Ch. 7 - Petty cash fund Prepare journal entries for each...Ch. 7 - Ratio of cash to monthly cash expenses Financial...Ch. 7 - Ratio of cash to monthly cash expenses Financial...Ch. 7 - Sarbanes-Oxley internal control report Using...Ch. 7 - Internal Controls Faith Cassen has recently been...Ch. 7 - Internal Controls Ramonas Clothing is a retail...Ch. 7 - Internal Controls for bank lending Pacific Bank...Ch. 7 - Internal Controls One of the largest losses in...Ch. 7 - Internal controls An employee of JHT Holdings,...Ch. 7 - Internal controls All-Around Sound Co. discovered...Ch. 7 - Financial statement fraud A former chairman, CFO,...Ch. 7 - Internal control of cash receipts The procedures...Ch. 7 - Internal control of cash receipts Sergio Flores...Ch. 7 - Internal control of cash receipts The mailroom...Ch. 7 - Entry for cash sales; cash short The actual cash...Ch. 7 - Entry for cash sales; cash over The actual cash...Ch. 7 - Internal control of cash payments Abbe Co. is a...Ch. 7 - Internal control of cash payments Paragon Tech...Ch. 7 - Bank reconciliation Identify each of the following...Ch. 7 - Entries based on bank reconciliation Which of the...Ch. 7 - Bank reconciliation The following data were...Ch. 7 - Entries for bank reconciliation Using the data...Ch. 7 - Entries for note collected by bank Accompanying a...Ch. 7 - Bank reconciliation An accounting clerk for...Ch. 7 - Bank reconciliation Identify the errors in the...Ch. 7 - Using bank reconciliation to determine cash...Ch. 7 - Petty cash fund entries Journalize the entries to...Ch. 7 - Variation in cash flows Mattel, Inc., designs,...Ch. 7 - Cash to monthly cash expenses ratio During 2016,...Ch. 7 - Cash to monthly cash expenses ratio Capstone...Ch. 7 - Cash to monthly cash expenses ratio Amicus...Ch. 7 - Evaluating internal control of cash T he following...Ch. 7 - Transactions for petty each, cash short and over...Ch. 7 - Bank reconciliation and entries The cash account...Ch. 7 - Bank reconciliation and entries The cash account...Ch. 7 - Bank reconciliation and entries Beeler Furniture...Ch. 7 - Evaluating internal control of cash The following...Ch. 7 - Transactions for petty cash, cash short and over...Ch. 7 - Bank reconciliation and entries The cash account...Ch. 7 - Bank reconciliation and entries The cash account...Ch. 7 - Bank reconciliation and entries Sunshine Interiors...Ch. 7 - Ethics and professional conduct in business During...Ch. 7 - Internal controls The following is an excerpt from...Ch. 7 - Internal controls The following is an excerpt from...Ch. 7 - Ethics and professional conduct in business Doris...Ch. 7 - Bank reconciliation and internal control The...Ch. 7 - Cash to monthly cash expenses ratio TearLab Corp....

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