Question

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 receiving and recording cash should be assigned to different individuals 2. Daily cash counts should be made by cashier department supervisors. 3. Cash reccipts should be deposited in bank in total daily. 4. Cash register tapes should be used for over-thc-counter receipts. 5. Each check should be compared with approved invoices before being issued. 6. The duties of approving an item for payment and paying the item should be performed by different individuals. 7. All checks should be prenumbered. 8. Only the treasurer should be authorized to sign checks. 9. All personnel who handle cash should be bonded 10. Blank checks should be stored in a safe, and access should be restricted. 11. Only designated personnel should be authorized to handle and have access to cash reccipts. 12. After payment, an invoice should be stamped PAID

Answer 1

Answer

The duties of receiving and recording cash should be assigned to different individuals -Segregation of duties

Daily cash counts should be made by cashier department supervisors - Independent internal verification

Cash receipts should be deposited in bank in total daily -Other controls

Cash register tapes should be used for over-the-counter receipts. -Documentation procedures

Each check should be compared with approved invoices before being issued -Independent internal verification

The duties of approving an item for payment and paying the item should be performed by different individuals -Segregation of duties

All checks should be prenumbered. - -Documentation procedures

Only the treasurer should be authorized to sign checks. -Establishment of responsibility

All personnel who handle cash should be bonded. -Other controls

Blank checks should be stored in a safe, and access should be restricted -Physical, mechanical, and electronic controls

Only designated personal should be authorized to have access to cash receipts -Establishment of responsibility

After payment, invoices should be stamped Paid -Documentation procedures