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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

INTERNAL CONTROL PROCEDURES AND PROCESSES In the left column below, four different internal control procedures are described. In the right column, the four basic types of internal control activities are listed. Match the procedures with the activities by placing the letter of the appropriate activity on the blank provided.

1. ____ All passwords for access to sales and inventory databases must be changed monthly.

2. ____ All new hires must be approved by the department of human resources.

3. ____ All sales invoices are prenumbered and accounted for.

4. ____ Bank reconciliations are prepared by an employee with no other cash responsibilities.

a. Segregation of duties

b. Authorization procedures and related responsibilities

c. Adequate documents and records

d. Protection of assets and records

To determine

Match the procedures with the activities by placing the letter of the appropriate activity on the blank provide.

Explanation

Internal control activities:

Control activities consist of policies and procedures that are established to assist the management in meeting its control objectives. Four types of control activities are listed below;

1. Segregation of duties:

Different employees must be assigned with the responsibility of performing different parts of a transaction. For example, one employee should be responsible for purchasing goods and the other employee must be responsible for receiving and keeping the goods in inventory.

2. Authorization procedures and related responsibilities:

Activities of business must be promptly authorized. It addition, it must be likely to recognize who is accountable for every activity that has occurred. For example, to acquire new machinery, a signed document must authorize the purchase later; the signed document indicates the person is responsible for the action...

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