Practice Exercise 7-1 Match each of the following control activities with its appropriate description. 1. Assignment...
Practice Exercise 7-1
Match each of the following control activities with its appropriate description.
1. Assignment of responsibility
2. Segregation of duties
3. Documentation
4. Physical controls
5. Review and reconciliation
(a) All transactions should include original, detailed receipts.
(b) Undeposited cash should be stored in the company safe.
(c) Surprise cash counts are performed by internal audit.
(d) Responsibility for related activities should be assigned to specific employees.
(e) Cheque signers are not allowed to record cash transactions.
Homework Answers
| (a) All transactions should include original, detailed receipts. | Documentation |
| (b) Undeposited cash should be stored in the company safe. | Physical controls |
| (c) Surprise cash counts are performed by internal audit. | Review and reconciliation |
| (d) Responsibility for related activities should be assigned to specific employees. | Assignment of responsibility |
| (e) Cheque signers are not allowed to record cash transactions. | Segregation of duties |
Add Answer to:
Practice Exercise 7-1
Match each of the following control activities with its
appropriate description.
1. Assignment...
Wong has the following internal controls over cash receipts and cash payments. Identify the control activity...
Wong has the following internal controls over cash receipts and cash payments. Identify the control activity that is applicable to each item in the table shown below: All cash is deposited intact, in the bank account, daily. Segregation of Duties/Independent checks of performance/Documentation procedures/Physical and it control/ Establishment of responsibility/Human Resource Controls Blank cheques are stored in a safe in the controller’s office. Segregation of Duties/Independent checks of performance/Documentation procedures/Physical and it control/ Establishment of responsibility/Human Resource Controls All cashiers...
Brief Exercise 7-4 Rolling Hills Ltd. has the following internal controls over cash payments. Identify the...
Brief Exercise 7-4 Rolling Hills Ltd. has the following internal controls over cash payments. Identify the control activity that is applicable to each procedure. 1. Company cheques are prenumbered. 2. The bank statement is reconciled monthly by the assistant controller. 3. Blank cheques are stored in a safe in the controller's office. Both the controller and the assistant controller are required to sign cheques or authorize electronic payments. 5. Cheque signers are not allowed to record cash payments. 6. All...
Match each of the following principles of internal control with the appropriate description below. A. Establishment...
Match each of the following principles of internal control with the appropriate description below. A. Establishment of responsibility B. Segregation of duties C. Documentation procedures D. Physical controls E. Independent internal verification F. Human resource controls _____ 1. Involves the review, comparison, and reconciliation of data prepared by other employees. _____ 2. Provide evidence that transactions and events have occurred. _____ 3. Includes the authorization and approval of transactions. _____ 4. Rotating employees' duties and requiring employees to take vacations....
3. Six internal control principles related to cash transactions are discussed in the textbook. These principles,...
3. Six internal control principles related to cash transactions are discussed in the textbook. These principles, with code letters, are: Establishment of responsibility Segregation of dutics Documentation procedures Physical, mechanical, and clectronic controls Independent internal verification Other 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...
Select the appropriate control activities for each of the following definitions. Control Activities Definitions a. The...
Select the appropriate control activities for each of the following definitions. Control Activities Definitions a. The company should maintain security over assets and accounting records. Management should periodically determine whether the amounts of physical assets of the company match the accounting records. The company should provide employees with appropriate guidance to ensure " they have the knowledge necessary to carry out their job duties. The actual performance of individuals or processes should be checked against their expected performance. Authorizing transactions,...
Select the appropriate control activities for each of the following definitions. Control Activities b. c Definitions...
Select the appropriate control activities for each of the following definitions. Control Activities b. c Definitions a. The company should maintain security over assets and accounting records. Management should periodically determine whether the amounts of physical assets of the company match the accounting records. The company should provide employees with appropriate guidance to ensure they have the knowledge necessary to carry out their job duties. The actual performance of individuals or processes should be checked against their expected performance. Authorizing...
Current Attempt in Progress The following control procedures are used in Keaton Company for over-the-counter cash...
Current Attempt in Progress The following control procedures are used in Keaton Company for over-the-counter cash receipts (a) For each procedure, explain the weakness in internal control and identify the control principle that is violated. Weakness Procedure Principle Violated 1. Each store manager is responsible for interviewing applicants for cashier jobs. They are hired if they seem honest and trustworthy. Cashiers are not bonded and background checks are not conducted Cash is not adequately protected from theft Inability to establish...
The following control procedures are used in Bunny’s Boutique Shoppe for cash disbursements. (a) For each...
The following control procedures are used in Bunny’s Boutique Shoppe for cash disbursements. (a) For each procedure, explain the weakness in internal control and identify the internal control principle that is violated. Procedure Weakness Principle Violated 1. Each week, 100 company checks are left in an unmarked envelope on a shelf behind the cash register. select the weakness in internal control Use...
Current Attempt in Progress The following control procedures are used in Bunny's Boutique Shoppe for cash...
Current Attempt in Progress The following control procedures are used in Bunny's Boutique Shoppe for cash disbursements. (a) For each procedure, explain the weakness in internal control and identify the internal control principle that is violated. Procedure Weakness Principle Violated 1. Each week, 100 company checks are left in an unmarked envelope on a shelf behind the cash register. 2. The store manager personally approves all payments before she signs and issues checks. Use of cash instead of checks; no...
Novak Corporation sells coffee beans, which are sensitive to price fluctuations. The following inventory information is...
Novak Corporation sells coffee beans, which are sensitive to
price fluctuations. The following inventory information is
available for this product at December 31, 2018:
Coffee
Bean
Units
Unit Cost
Net Realizable
Value
Coffea arabica
11,700 bags
$5.60
$5.55
Coffea robusta
5,700 bags
3.40
3.50
Inventory at the lower of cost and net realizable value
$
84315
Prepare any journal entry required to record the LCNRV,
assuming that Novak uses a perpetual inventory system. (Round
answer to the nearest whole dollar,...
Brief Exercise 7-4 Rolling Hills Ltd. has the following internal controls over cash payments. Identify the control activity that is applicable to each procedure. 1. Company cheques are prenumbered. 2. The bank statement is reconciled monthly by the assistant controller. 3. Blank cheques are stored in a safe in the controller's office. Both the controller and the assistant controller are required to sign cheques or authorize electronic payments. 5. Cheque signers are not allowed to record cash payments. 6. All...
3. Six internal control principles related to cash transactions are discussed in the textbook. These principles, with code letters, are: Establishment of responsibility Segregation of dutics Documentation procedures Physical, mechanical, and clectronic controls Independent internal verification Other 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...
Select the appropriate control activities for each of the following definitions. Control Activities Definitions a. The company should maintain security over assets and accounting records. Management should periodically determine whether the amounts of physical assets of the company match the accounting records. The company should provide employees with appropriate guidance to ensure " they have the knowledge necessary to carry out their job duties. The actual performance of individuals or processes should be checked against their expected performance. Authorizing transactions,...
Select the appropriate control activities for each of the following definitions. Control Activities b. c Definitions a. The company should maintain security over assets and accounting records. Management should periodically determine whether the amounts of physical assets of the company match the accounting records. The company should provide employees with appropriate guidance to ensure they have the knowledge necessary to carry out their job duties. The actual performance of individuals or processes should be checked against their expected performance. Authorizing...
Current Attempt in Progress The following control procedures are used in Keaton Company for over-the-counter cash receipts (a) For each procedure, explain the weakness in internal control and identify the control principle that is violated. Weakness Procedure Principle Violated 1. Each store manager is responsible for interviewing applicants for cashier jobs. They are hired if they seem honest and trustworthy. Cashiers are not bonded and background checks are not conducted Cash is not adequately protected from theft Inability to establish...
Current Attempt in Progress The following control procedures are used in Bunny's Boutique Shoppe for cash disbursements. (a) For each procedure, explain the weakness in internal control and identify the internal control principle that is violated. Procedure Weakness Principle Violated 1. Each week, 100 company checks are left in an unmarked envelope on a shelf behind the cash register. 2. The store manager personally approves all payments before she signs and issues checks. Use of cash instead of checks; no...
Novak Corporation sells coffee beans, which are sensitive to
price fluctuations. The following inventory information is
available for this product at December 31, 2018:
Coffee
Bean
Units
Unit Cost
Net Realizable
Value
Coffea arabica
11,700 bags
$5.60
$5.55
Coffea robusta
5,700 bags
3.40
3.50
Inventory at the lower of cost and net realizable value
$
84315
Prepare any journal entry required to record the LCNRV,
assuming that Novak uses a perpetual inventory system. (Round
answer to the nearest whole dollar,...
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