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.
_____ 5. Related activities should be assigned to different individuals.
_____ 6. Using garment sensors to deter theft.
_____ 7. The same person opens incoming mail and posts the accounts receivable subsidiary ledger.
_____ 8. Three people handle cash sales from the same cash register drawer.
_____ 9. A clothing store is experiencing a high level of inventory shortages because people try on clothing and walk out of the store without paying for the merchandise.
_____ 10. The person who is authorized to sign checks approves purchase orders for payment.
_____ 11. Some cash payments are not recorded because checks are not prenumbered.
_____ 12. Cash shortages are not discovered because there are no daily cash counts by supervisors.
_____ 13. The treasurer of the company has not taken a vacation for over 20 years
Homework Answers
| 1 | E. Independent internal verification | |
| 2 | C. Documentation procedures | |
| 3 | A. Establishment of responsibility | |
| 4 | F. Human resource controls | |
| 5 | B. Segregation of duties | |
| 6 | D. Physical controls | |
| 7 | B.Segregation of duties | |
| 8 | A. Establishment of responsibility | |
| 9 | D. Physical controls | |
| 10 | B. Segregation of duties | |
| 11 | C. Documentation procedures | |
| 12 | E. Independent internal verification | |
| 13 | F. Human resource controls | |
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