menu
bartleby
search
close search
Hit Return to see all results
close solutoin list

Internal control of cash receipts Sergio Flores works at the drive-through window of Big & Bad Burgers. Occasionally, when a drive-through customer orders, Sergio fills the order and pockets the customer’s money. He does not ring up the order on the cash register. Identify the internal control weaknesses that exist at Big & Bad Burgers and discuss what can be done to prevent this theft.

BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615
Chapter 8, Problem 8.10EX
Textbook Problem
89 views

Internal control of cash receipts

Sergio Flores works at the drive-through window of Big & Bad Burgers. Occasionally, when a drive-through customer orders, Sergio fills the order and pockets the customer’s money. He does not ring up the order on the cash register.

Identify the internal control weaknesses that exist at Big & Bad Burgers and discuss what can be done to prevent this theft.

To determine

Internal Control: Internal control refers to the policies, and plans of the business organization along with other measures with a view to safeguard its assets, encourage the employees to adhere to the plans, to improve on the operational efficiency, and to ensure correct and reliable accounting information.

Five elements of internal control are as below:

  • Control Environment: Control Environment refers to the attitude of top brass of the company or the corporate culture. The top brass of the company must set the tone to improve the morale for rest of the employees of the business.
  • Risk assessment: The business must be able identify the risk associated with it, and accordingly use the internal control to safeguard its assets and ensures fairness in presentation in accounting information.
  • Control procedures: The objective of setting the control procedure is to ensure that the business achieves its objectives.
  • Monitoring controls: The internal control used in the business is being monitored by the internal auditors who are hired by the business, to ensure that the employees are adhering to the policies of the business and running the operations efficiently. The external auditors on the other hand ensures that the business accounting records are being maintained in accordance with the Generally Accepted Accounting Principles (GAAP).
  • Information and communication: Information and communication system is important for a business and hence only authorized persons should be allowed the access to the confidential accounting information. Approvals are also should be made mandatory for the transactions by the control system.

To identify: The internal control weakness which exists in B and B and ways that will prevent the theft.

Explanation of Solution

When B and B are concerned, they face failure towards separate responsibilities for other related operations. B and B can avoid the theft by limiting the drive- through clerk in taking the customer orders, receiving cash, returning customer change, accepting the customer payments and handle the customers.

When another employee is made responsible for assembling orders, then drive-through clerk needs to enter the order in the cash register. This produces the printed receipt on the computer screen at the food area. Thus, once the drive-through clerk enters the sale in the cash register and thus, clerk do not steal the customer payment as the clerk’s cash drawer do not make balance at the end of the shift...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 8 Solutions

Accounting (Text Only)
Show all chapter solutions
add
Ch. 8 - Internal control elements Identify each of the...Ch. 8 - Internal control elements Identify each of the...Ch. 8 - Items on companys bank statement The following...Ch. 8 - Items on companys bank statement The following...Ch. 8 - Bank reconciliation The following data were...Ch. 8 - Bank reconciliation The following data were...Ch. 8 - Petty cash fund Prepare journal entries for each...Ch. 8 - Petty cash fund Prepare journal entries for each...Ch. 8 - Ratio of cash to monthly cash expenses Financial...Ch. 8 - Ratio of cash to monthly cash expenses Financial...Ch. 8 - Sarbanes-Oxley internal control report Using...Ch. 8 - Internal controls Faith Cassen has recently been...Ch. 8 - Internal controls Ramonas Clod1ing is a retail...Ch. 8 - Internal controls for bank lending Pacific Bank...Ch. 8 - Internal controls One of the largest losses in...Ch. 8 - Internal controls An employee of JHT Holdings,...Ch. 8 - Internal controls All-Around Sound Co. discovered...Ch. 8 - Financial statement fraud A former chairman, CFO,...Ch. 8 - Internal control of cash receipts The procedures...Ch. 8 - Internal control of cash receipts Sergio Flores...Ch. 8 - Internal control of cash receipts The mailroom...Ch. 8 - Entry for cash sales; cash short The actual cash...Ch. 8 - Entry for cash sales; cash over The actual cash...Ch. 8 - Internal control of cash payments Abbe Co. is a...Ch. 8 - Internal control of cash payments Paragon Tech...Ch. 8 - Bank reconciliation Identify each of the following...Ch. 8 - Bank reconciliation Identify each of the following...Ch. 8 - Bank reconciliation The following data were...Ch. 8 - Bank reconciliation The following data were...Ch. 8 - Entries for note collected by bank Accompanying a...Ch. 8 - Bank reconciliation An accounting clerk for...Ch. 8 - Bank reconciliation The following June 30 bank...Ch. 8 - Using bank reconciliation to determine cash...Ch. 8 - Petty cash fund entries Journalize the entries to...Ch. 8 - Variation in cash flows Mattel, Inc., designs,...Ch. 8 - Cash to monthly cash expenses ratio El Dorado Inc....Ch. 8 - Cash to monthly cash expenses ratio Capstone...Ch. 8 - Cash to monthly cash expenses ratio Amicus...Ch. 8 - Evaluating internal control of cash The following...Ch. 8 - Transactions for petty cash, cash short and over...Ch. 8 - Bank reconciliation and entries The cash account...Ch. 8 - Bank reconciliation and entries The cash account...Ch. 8 - Bank reconciliation and entries Beeler Furniture...Ch. 8 - Evaluating internal control of cash The following...Ch. 8 - Transactions for petty cash, cash short and over...Ch. 8 - Bank reconciliation and entries The cash account...Ch. 8 - Bank reconciliation and entries The cash account...Ch. 8 - Bank reconciliation and entries Sunshine Interiors...Ch. 8 - Ethics in Action During the preparation of the...Ch. 8 - Internal controls The following is an excerpt from...Ch. 8 - Internal controls The following is an excerpt from...Ch. 8 - Ethics and professional conduct in business Doris...Ch. 8 - Bank reconciliation and internal control The...Ch. 8 - Cash to monthly cash expenses ratio TearLab Corp....

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions add
What is the natural business year?

Financial & Managerial Accounting

Differentiate between dealer markets and stock markets that have a physical location.

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

What is inflation and what causes it?

Principles of Microeconomics (MindTap Course List)

Name the two types of ledgers.

Accounting Information Systems

Begin by looking at the historical performance of the overall stock market. Typically, on most of the financial...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Name the types of cash flows associated with operating activities.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)