Which of the following is an example of poor internal control in an organization?a. The company rotates employees through various jobs.b. The accounting department compares goods received with the related purchase order.c. The mailroom clerk records daily cash receipts in the journal.d. Employees must take vacations.

Which of the following is an example of poor internal control in an organization?a. The company rotates employees through various jobs.b. The accounting department compares goods received with the related purchase order.c. The mailroom clerk records daily cash receipts in the journal.d. Employees must take vacations.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter8: Fraud, Internal Controls, And Cash

Section: Chapter Questions

Problem 5MC: There are several elements to internal controls. Which of the following would not address the issue...

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Which of the following is false about accounting information systems? A. They provide reports that people analyze. B. They prevent errors and stop employees from stealing inventory. C. They are designed to gather data about the companys transactions. D. They consist of processes that involve input of data from source documents, processing, output, and storage.
Which of the following reflects a weak internal control system? Please explain with full explanation. a. All employees are well supervised. b. A single employee is responsible for comparing a receiving report to an invoice. c. All employees must take their vacations. d. A single employee is responsible for collecting and recording cash.
Michelle Darby receives cash from customers. Her other assigned job is to post the collections to customer accounts receivable. Her company has a weak assignment of responsibilities. ethics. computer controls. separation of duties.
Which of the following reflects a weak internal control system? Oa. All employees are well supervised. b. A single employee is responsible for comparing a receiving report to an invoice. C. All employees must take their vacations. )d. A single employee is responsible for collecting and recording cash.
1. Which one of the following reflects a weak internal control system? A. all employees are well supervised B. a single employee is responsible for comparing a receiving report to an invoice C. all employees must take their vacations D. a single employee is responsible for collecting and recording of cash 2. The debit balance in Cash Short and Over at the end of an accounting period is reported as A. income on the income statement B. an asset on the balance sheet C. an expense on the income statement D. a liability on the balance sheet 3. A bank reconciliation should be prepared periodically because A. the bank must make sure that its records are correct B. any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected C. the bank has not recorded all of its transactions D. the company's records and the bank's records are in agreement
Michelle Darby receives cash from customers. Her other assigned job is to post the collections to customer accounts receivable. Her company has weak a. assignment of responsibilities. b. ethics. c. computer controls. d. separation of duties.
Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control principle violated or followed for each procedure. 1. The company does not use electronic time clocks because it fears it will hurt employee morale. 2. An employee cannot approve their own request for purchases of inventory. 3. Several salesclerks share the same cash drawer. 4. Employees that handle easily transferable assets such as cash are bonded. 5. The company does not allow employees with access to cash to modify accounting records. Weakness or Strength Internal Control Principle 1. 2. 3. 4. 5.
Which of the following reflects a weak internal control system? Oa. All employees must take their vacations. Ob. A single employee is responsible for collecting and recording cash. Oc. A single employee is responsible for comparing a receiving report to an invoice. Od. All employees are well supervised.
Which of the following is not a generally recognized internal control activity? Oa. limiting access to computerized accounting records Ob. reducing the cost of hiring seasonal employees Oc. preparation of bank reconciliations on a monthly basis Od. establishment of clear lines of authority to carry out specific tasks
Which of the following is an example of fraudulent financial reporting? a. The treasurer diverts customer payments to his personal due, concealing his actions by debiting an expense account, thus overstating expenses. O b. An employee steals inventory and the "shrinkage" is recorded in cost of goods sold. O c. Company management changes inventory count tags and overstates ending inventory, while understating cost of goods sold. O d. An employee steals small tools from the company and neglects to return them; the cost is reported as a miscellaneous operating expense.
Identify the fraud triangle risk factor (Opportunity, Pressure, or Rationalization) in each situation. 1. The business has no cameras or security devices at its warehouse. 2. A worker sees other employees regularly take inventory for personal use. 3. Payroll manager feels she is greatly underpaid. 4. No one matches the cash in the register to receipts when shifts end. 5. Managers are expected to grow business or be fired. 6. Managers are told to make extreme cuts in expenses. Opportunity Rationalization Pressure Opportunity Pressure Pressure
Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control violated or followed for each procedure. 1. The owner does not use ID scanners to limit access to expensive merchandise. Instead, the owner argues they hire honest employees. 2. Several salesclerks share the same cash drawer. 3. The company devotes resources towards keeping accurate accounting records for machinery. 4. The company does not allow employees with access to cash to modify accounting records. 5. Employees that handle easily transferable assets such as cash are bonded. Weakness or Strength 1. Weakness 2. Weakness 3. Strength 4. Strength 5. Strength Internal Control Principle