Question

In: Accounting

Use internal control to answer: 1.In your store, bank deposit slips did not match cash receipts....

Use internal control to answer:

1.In your store, bank deposit slips did not match cash receipts.

2.Your store had an unusual number of bounced checks. The same employee was responsible for approving each of the bounced checks.

Questions:

What errors may occur?

What internal controls may prevent this problem in the future?

Solutions

Expert Solution

1) Bank deposit slips did not match cash receipts

This concern could have resulted in the failure to secure checks and cash received from customers. Also, there could also be a lack of separation of duties for handling the bank deposits. Another risk is that the stores do not have a bank reconciliation system set up to ensure that cash records are accurate.

To prevent this problem in future, there should be a proper bank reconciliation system setup. There should be segregation of duties so that a single person will not have control over the recording and actual cash receipts.

2) Store had an unusual number of bounced checks. The same employee was responsible for approving each of the bounced checks.

This concern could have resulted in the fact that same employee is responsible for approving bounced checks. This is a segregation of duties issue and this type of issue can lead to fraudulent activity. Also, another risk could be that there is not someone else assigned to verify there is enough funds in the account. The problem with the bank deposit slips not matching the cash receipts could have also caused this concern.

To prevent this problem in future segregation of duties is required and a person should be appointed to verify the funds and activity of funds. By using these controls this problem can be prevented.


Related Solutions

1. Identify the internal control weakness over cash receipts.
Evaluating internal control over cash receipts Dogtopia sells pet supplies and food and handles all sales with a cash register. The cash register displays the amount of the sale. It also shows the cash received and any change returned to the customer. The register also produces a customer receipt butkeeps no internal record of the transactions. At the end of the day, the clerk counts the cash in the register and gives it to the cashier for deposit in the...
Prepare an internal control questionnaire to be used in evaluating the internal control over cash receipts...
Prepare an internal control questionnaire to be used in evaluating the internal control over cash receipts and cash disbursements. The internal control questionnaire should elicit a yes or not response to each question.
Which is not a key element of internal control over cash receipts? A) Daily entry in...
Which is not a key element of internal control over cash receipts? A) Daily entry in a voucher register B) Daily recording of all cash receipts in the accounting records C) Daily bank deposits D) Immediate counting by the person opening the mail or using the cash register
1.Consider the bank reconciliation: A format bank reconciliation is an internal control activity to safeguard cash....
1.Consider the bank reconciliation: A format bank reconciliation is an internal control activity to safeguard cash. How often should a bank reconciliation be performed? a.Twice a day b. Once a year, only if the tax accountant requests it be done c.One a month when the bank statement is received 2. Control activities include: a. Physical controls and document procedures b. Segregation of duties and establishment of responsibilities c.Independent internal verification and human resource controls d.All three answer choices combined define...
Identify the principles of internal control. Explain the use of cash and internal controls to prevent...
Identify the principles of internal control. Explain the use of cash and internal controls to prevent fraud. Explain why corporations invest in stocks and debt securities. Describe how debt and stock investments are reported in financial statements. Evaluate the effects of unusual or irregular items on financial statements.
Use internal control to answer: 1.In your stores, physical inventories were different than the recorded inventory...
Use internal control to answer: 1.In your stores, physical inventories were different than the recorded inventory amounts. Physical inventory was lower than the recorded inventory. 2.Your store seems to have an unusually high amount of sales returns for cash What errors may occur? What internal control may prevent this problem in the future?
PROBLEM 1 Match the internal control in the first column with Applicable control activities Adequate separation...
PROBLEM 1 Match the internal control in the first column with Applicable control activities Adequate separation of duties Adequate documents and records Proper authorization of transactions Physical controls over assets and documents Independent checks on performance Transaction related audit objective (not-assigned, for class discussion only) INTERNAL CONTROL a. CONTROL ACTIVITY b. TRANSACTION- RELATED AUDIT OBJECTIVE(S) 1. Sales invoices are matched with shipping documents by the computer system and an exception report is generated. 2. Receiving reports are prenumbered and accounted...
Analyze the current system and identify specific internal control problems. The cash receipts system starts when...
Analyze the current system and identify specific internal control problems. The cash receipts system starts when the wholesalers send back the remittance advice with their payment. This allows Craig Nelson, the mail room clerk, to collect the payment from the customer and process the cash receipt. Nelson then records the cash receipts in the cash receipts journal. Nelson prepares the deposit slips for the funds to be deposited into the bank along with the checks. The remittance advice is sent...
In your store, the amount of petty cash on hand did not correspond to the amount...
In your store, the amount of petty cash on hand did not correspond to the amount in the petty cash account. As a manager, you may use internal control knowedge to answer: 1.What errors may occur? 2.How to use a internal control procedure to prevent this problem in the future?
Class, why is periodic bank reconciliation considered part of good internal control over cash?
Class, why is periodic bank reconciliation considered part of good internal control over cash?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT