Which of the following related to a company’s control procedures? (1) Separating responsibilities for related operations (2) Safeguarding inventory in a locked storeroom (3) Identifying a sudden increase in slow payments (4) Operating style of management (5) Requiring employees to take vacations a.1, 3, and 5 b.1, 2, and 3 c.1, 2, and 5 d.1, 2, and 4

Which of the following related to a company’s control procedures? (1) Separating responsibilities for related operations (2) Safeguarding inventory in a locked storeroom (3) Identifying a sudden increase in slow payments (4) Operating style of management (5) Requiring employees to take vacations a.1, 3, and 5 b.1, 2, and 3 c.1, 2, and 5 d.1, 2, and 4

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter7: Accounting Information Systems

Section: Chapter Questions

Problem 6MC: Which of the following is false about accounting information systems? A. They provide reports that...

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Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control principle violated or followed for each procedure. 1. The same employee requests, records, and makes payment for purchases of inventory. 2. The company saves money by having employees involved in operations perform the only review of internal controls. 3. Time is saved by not updating records for use of supplies. 4. The recordkeeper is not allowed to write checks or initiate EFTs. 5. Each salesclerk is in charge of her own cash drawer.
Which situation indicates a weak internal control structure?a. the AR clerk authorizes the write off of bad debtsb. the record-keeping clerk maintains both AR and AP subsidiary ledgersc. the inventory control clerk authorizes inventory purchasesd. the AR clerk prepares customer statements every month
Which of the following could signal internal control problems within the accounting system? (1) Safeguarding inventory in a locked warehouse (2) Abuse of alcohol or drugs (3) Gaps in transactions numbers (4) Operating style of management (5) Sudden increase in slow payments a.1 and 2 b.2 and 4 c.1 and 3 d.3 and 5
Which of the following is not generally an internal control activity? a.Physically counting inventory in a perpetual inventory system b.Establishing clear lines of authority to carry out specific tasks c.Reducing the cost of hiring seasonal employees d.Limiting access to computerized accounting records
Items 1 through 10 present various internal controlstrengths or internal control deficiencies.1. Credit is granted by a credit department.2. Once shipment occurs and is recorded in the sales journal, all shipping documentsare marked “recorded” by the accounting staff.3. Sales returns are presented to a sales department clerk who prepares a written,prenumbered receiving report.4. Cash receipts received in the mail are received by a secretary with no recordkeepingresponsibility.5. Cash receipts received in the mail are forwarded unopened with remittance advicesto accounting.6. The cash receipts journal is prepared by the treasurer’s department.7. Cash is deposited weekly.8. Statements are sent monthly to customers.9. Write-offs of accounts receivable are approved by the controller.10. The bank reconciliation is prepared by individuals independent of cash receiptsrecordkeeping.a. For each of the preceding 1–10 items, indicate whether the item represents an:A. Internal control strength for…
Which internal control methodology provided below would be the best solution to resolve the following problem? The accountant had trouble reconciling how many cheques were used and the cheques that were left over. a. 1-Establishment of responsibility b. C. 3-Documentation procedures d. 2-Segregation of duties e. 4- Physical and IT controls 5-Independent checks of performance
The internal control procedures in Valentine Company result in the following provisions Identify the principles of internal control that are being followed in each case. Employees who have physical custody of assets do not have access to the a. accounting records. Physical Controls Segregation of Duties Independent Internal Verification Establishment of Responsibility Human Resource Controls Each month, the assets on hand are compared to the accounting records by an b. internal auditor. Documentation Procedures A prenumbered shipping document is prepared for each shipment of goods to C. customers.
Which of the following is an example of poor internal control in an organization?a. The company rotates employees through various jobs.b. The accounting department compares goods received with the related purchase order.c. The mailroom clerk records daily cash receipts in the journal.d. Employees must take vacations.
Which of the following is not a generally recognized internal control activity? Oa. limiting access to computerized accounting records Ob. reducing the cost of hiring seasonal employees Oc. preparation of bank reconciliations on a monthly basis Od. establishment of clear lines of authority to carry out specific tasks
4. SEGREGATION OF DUTIES Explain why each of the following combinations of tasks should or should not be separated to achieve adequate internal control. a. Approval of bad debt write-offs and the reconcil- iation of the AR subsidiary ledger and the GL control account b. Distribution of payroll checks to employees and approval of employee time cards. c. Posting of amounts from both the cash receipts and the cash disbursements journals to the gen- eral ledger. d. Writing checks to vendors and posting to the cash account. e. Recording cash receipts in the journal and pre- paring the bank reconciliation.
What internal control procedure(s) would provide protection against the following threats? a. Theft of goods by the shipping dock workers, who claim that the inventory shortages reflect errors in the inventory records.b. Posting the sales amount to the wrong customer account because a customer account number was incorrectly keyed into the system .c. Making a credit sale to a customer who is already four months behind in making payments on his account. d. Authorizing a credit memo for a sales return when the goods were never actually returned. e. Writing off a customer’s accounts receivable balance as uncollectible to conceal the theft of subsequent cash payments from that customer. f. Billing customers for the quantity ordered when the quantity shipped was actually less due to back ordering of some items .g. Lost sales because of stockouts of several products for which the computer records indicated there was adequate quantity on hand. h. A sales clerk sold a $7,000 wide-screen TV…
Allowing only certain employees to order goods and services for the company is an example of what internal control procedure? a.Proper authorization b.Independent verification c.Segregation of duties d.Safeguarding of assets and records