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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

Solutions

Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

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

USING INTERNAL CONTROLS TO PREVENT ERRORS The following misstatements occurred in the records of MW Company. For each misstatement, suggest a control to prevent it from happening.

1. A bill from a supplier was paid for goods that had not been ordered.

2. A supplier’s bill for 50 boxes of materials was paid even though only 40 boxes were received.

3. Expensive product components were stolen by an employee from a loading dock area after hours.

4. No bill was sent to a customer for a shipment because the shipping document was lost after the shipment was made.

1.

To determine

Suggest a control to prevent it from happening for the misstatement, if a bill from a supplier was paid for goods that had not been ordered.

Explanation

Internal control activities:

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

Adequate documents and records:

Adequate documents and records must be used for recording all business transaction...

2.

To determine

Suggest a control to prevent it from happening for the misstatement, if a supplier’s bill for 50 boxes of materials was paid even through only 40 boxes were received.

3.

To determine

Suggest a control to prevent it from happening for the misstatement, if a expensive product components were stolen by an employee from a loading dock area after hours.

4.

To determine

Suggest a control to prevent it from happening for the misstatement, if no bill was sent to a customer for a shipment because the shipping document was lost after  the shipment was made.

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