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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Why should the employee who handles cash receipts not have the responsibility for maintaining the accounts receivable records? Explain.

To determine

Internal Control: Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations. The following are the some of the internal control procedures:

  • Competent personnel, rotating duties, and mandatory vacations
  • Separating responsibilities for related operations
  • Separating operations, custody of assets, and accounting
  • Proofs and security measures

To determine: the reason for not one person must not handle the cash receipts should not responsible for managing the records of accounts receivables.

Explanation

Cash received from customer are entered in the records of accounts receivable. This receipt of cash and recording must not be done by the same person...

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