Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Chapter 10, Problem 11RQSC
To determine
Introduction: Cash receipt control means management of the cash allocation and its distributions. It includes monitoring the credit and cash collection policies. Without any cash control, a normal business cannot survive in such a challenging economy.
To match: The objectives of the control activities.
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Students have asked these similar questions
Management uses a voucher system to help control and monitor cash payments. Which one or more of the four documents listed below are prepared as part of a voucher system of control? a. Purchase order b. Outstanding check c. Invoice d. Voucher
Which of the following is a good internal control for cash payments?
A.Payments to suppliers should be made as quickly as possible
B.An experienced accountant should have total responsibility for all cash payment functions.
C.Payments should be authorised before they are made
D.Supporting documentation should be destroyed immediately after payment to avoid
incorrectly twice.
Consider the following internal controls associated with an evaluated receipts process.
For each control, identify the assertion for which the control is designed to prevent, or detect and correct misstatements.
a.
b.
C.
d.
e.
f.
g.
h.
Software generates a daily report comparing the daily total in the cash
disbursements journal with the total of payables submitted to the third-party
payment processor for payment, and discrepancies are reported.
Software generates a daily report of any discrepancies between the vendor
accounting coding and general ledger accounts coding, which is compared
with the purchase order and purchase requisition.
Software generates a daily report of any discrepancies between the recorded
payable and quantities on the receiving report. Once a receiving report is
matched with a purchase, it cannot be matched with another purchase.
Software generates a daily report of receiving reports that have not been
matched one-for-one with the recording of a purchase and a…
Chapter 10 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
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Similar questions
- Which of the following assets require the strongest of internal controls? A. inventory B. credit cards C. computer equipment D. casharrow_forwardWhich of the following is an effective internal control for cash payments? A.Payments should be authorised before they are made B.Payments to suppliers should be made as quickly as possible C.An experienced accountant should have total responsibility for all cash payment functions D.Supporting documentation should be destroyed immediately afterpayment to avoid incorrectly paying twicearrow_forwardMa1. Control activities are the policies and procedures that help ensure that management directives are carried out and which are designed to prevent and detect fraud and error occurring. An example of a control activity is the maintenance of a control account. Explain any five internal control activities and describe measures of internal control you would recommend to ensure that cash receipts and resources are properly accounted for and managed.arrow_forward
- Good internal controls include upon receiving checks from customers by mail, a responsible employee should A. Add the checks to the daily cash summary B. Verify that check is supported by prenumbered sales invoices C. Prepare a duplicate listing of checks received D. Record the checks in the cash receipts journalarrow_forwardAs part of a strong internal control system, which of the following accounting duties needsto be separated from cash handling?a. Record keepingb. Filingc. Transaction approvald. Both a and c need to be separated from cash handling.arrow_forwardWhich statement is NOT correct for an expenditure system with proper internal controls?a. Cash disbursements maintain the check register.b. Accounts payable maintains the accounts payable subsidiary ledger.c. Accounts payable is responsible for paying invoices.d. Accounts payable is responsible for authorizing invoices.arrow_forward
- Six internal control principles related to cash transactions are discussed in the textbook. These principles, with code letters, are: CodeInternal Control Principle AEstablishment of responsibility BSegregation of duties CDocumentation procedures DPhysical controls EIndependent internal verification FHuman resource controls Instructions: Match the above principles to the following applications related to cash receipts and cash disbursements by placing the code in the space provided. Each code letter can be used once, more than once, or not at all. ____ 1.The duties of receiving and recording cash should be assigned to different individuals. ____ 2.Daily cash counts should be made by cashier department supervisors. ____ 3.Employees should be required to take vacations. ____ 4.Cash register tapes should be used for over-the-counter receipts. ____ 5.Each check should be compared with approved invoices before…arrow_forwardBelow are descriptions of internal control problems. In the space to the left of each item, enter the code letter of th best internal control principle that is related to the problem described. Internal Control Principles A. Establishment of responsibility B. Segregation of duties C. Physical control devices D. Documentation procedures E. Independent internal verification F. Human resource controls 1.The same person opens incoming mail and records the cash receipts. 2. Three people handle cash sales from the same cash register drawer. 3. A clothing store is experiencing a high level of inventory shortages because people try on clothing and walk out o the store without paying for the merchandise. 4. The person who is authorized to sign checks approves purchase orders for payment 5. Some cash payments are not recorded because checks are not pre-numbered. 6. Cash shortages are not discovered because there are no daily cash counts by supervisors. 7. The treasurer of the company has not…arrow_forwardWhat are the step(s) when using the Sales with Payment customer workflow? A. Create sales receipts deposited to the Undeposited Funds account > Create Bank Deposit B. Create Sales Receipt deposited to the checking account C. Create Bank Deposit D. Create Invoice > Receive Payment deposited to the Undeposited Funds account > Create Bank Depositarrow_forward
- 1. An effective system of internal control requires segregation of basic functions. Which three of the following functions should ideally be segregated? Explain details A. Authorisation of orders B. Recording cash receipts on receivables ledger C. Invoicing D. Credit control E. Reconciliation of receivables ledger with receivables ledger control accountarrow_forwardIdentify each of the following statements as either true or false. A voucher system of control is a control system exclusively for cash receipts.arrow_forwardWhich of the following tasks should the cash disbursement clerk NOT perform?a. review the supporting documents for completeness and accuracyb. prepare checksc. approve the liabilityd. mark the supporting documents paidarrow_forward
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