Question

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Q1- A

A company wants to implement good internal control. What are the policies and procedures you can suggest to minimize human frauds and errors?

Q1-B

Assume that you have a company. And the management team estimates that 3% of sales will be uncollectible.

Give any amount of sales and prepare the journal entry using the percent of sales method

Answer 1

Q1- A

A company wants to implement good internal control. What are the policies and procedures you can suggest to minimize human frauds and errors?

company like to believe that its employees and management are above reproach and would never do something to harm the organization. However, it is also a wise business move to have systems in place to ensure things are running smoothly and there aren't any issues. Internal controls are procedural measures an organization adopts to protect its assets and property. Broadly defined, these measures include physical security barriers, access restriction, locks and surveillance equipment. They are more often regarded as procedures and policies that protect accounting data. company records, cash and other assets. Think of these controls as a type of insurance; no one wants to ever use them, but they are good to have in the event there's an issue.

Internal Control Examples

Internal control procedures document transactions by creating an audit trail. They limit the actions of employees by requiring authorization, approval and verification of selected transactions. They segregate duties because certain job responsibilities are mutually incompatible and, if left unchecked, allow one person too much unsupervised access to company assets.

Controls in General

Good insurance is the best "last-resort" internal control a business owner can have. Coverage of loss due to employee theft may mean the difference between recovering from fraud or closing a business. Insurers often require certain specified internal controls as a prerequisite for coverage.

Preventive Controls

Many prevent controls are based on the concept of separating duties. Examples include prohibiting the same person from conducting related transactions such as initiating and recording transactions; making purchases and approving payments; ordering and accepting inventory; approving vendors and making payments; receiving bills and approving payments; and authorizing returns and issuing refunds.

Detective Controls Explained

Detective controls are internal controls designed to identify problems that already exist. Audits are an example of a detective control. Monthly reconciliation of bank accounts, review and verification of refunds, reconciliation of petty cash accounts, audits of payroll disbursements or conducting physical inventory are all examples of detective controls.

Q1-B

Assume that you have a company. And the management team estimates that 3% of sales will be uncollectible.

Give any amount of sales and prepare the journal entry using the percent of sales method

percent of sales method is a financial forecasting model in which all of a business's accounts — financial line items like costs of goods sold, inventory, and cash — are calculated as a percentage of sales. Those percentages are then applied to future sales estimates to project each line item's future value.