Question

5. At the end of each day, all cash receipts are placed in the bank's night depository. 6. At the end of each day, an accounting clerk compares the duplicate copy of the daily cash deposit slip with the deposit receipt obtained from the bank. 7. All mail is opened by the mail clerk, who forwards all cash remittances to the cashier. The cashier prepares a listing of the cash receipts and forwards a copy of the list to the accounts receivable clerk for recording in the accounts. 8. The bank reconciliation is prepared by the cashier, who works under the supervision of the treasurer. Requirements: Use the Control Procedures to answer the following A Indicate whether each of the procedures of internal control over cash represents (1) a strength or (2) a weakness. B For each weakness, indicate why it exists and make a recommendation,

Answer 1

Part A

5. At the end of each day, all cash receipts are placed in the bank’s night depository.- strength (if not done then it may result into money theft)
6. At the end of each day, an accounting clerk compares the duplicate copy of the daily cash deposit slip with the deposit receipt obtained from the bank.- strength ( there is proper segregation of duties)
7. All mail is opened by the mail clerk, who forwards all cash remittances to the cashier. The cashier prepares a listing of the cash receipts and forwards a copy of the list to the accounts receivable clerk for recording in the accounts. - weakness
8. The bank reconciliation is prepared by the cashier, who works under the supervision of the treasurer. - weakness

Part B

7. An initial listing of cash remittances should be prepared by the mail clerk should before transferring the cash receipts to the cashier. This will generate initial accountability for the cash receipts. It should be the mail clerk's duty to give a copy of the listing of remittances to the accounts receivable clerk for maintaining proper accounting records.
8. The proper segregation of duties is required. The task of preparing bank reconciliation should be performed by some other employee who is not involved with the handling or recording of cash.