ch08 - Exercise Set B - Chapter 8 EXERCISES: SET B E8-1B...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Identify the principles of internal control. (SO 2) EXERCISES: SET B E8-1B Joel Miranda is the owner of Joel’s Burgers. Joel’s Burgers is operated strictly on a carryout basis. Customers pick up their orders at a counter where a clerk exchanges the food for cash.While at the counter, the customer can see other employees making the food at different stations. Instructions Identify the six principles of internal control and give an example of each principle that you might observe when picking up your food. ( Note : It may not be possible to observe all the principles.) E8-2B The following control procedures are used at Javier Company for over-the-counter cash receipts. 1. All over-the-counter receipts are registered by four clerks who use a cash register with a single cash drawer (till). 2. To minimize the risk of robbery, cash in excess of $200 is stored in an unlocked drawer in a desk in the back room. 3. Each clerk counts his/her own receipts at the end of the day and reconciles that amount to the cash register total. 4. A bookkeeper prepares a journal entry to record the day’s cash receipts, then deposits the re- ceipts in the bank. 5. To save funds, cashiers do not get vacation days. Instructions (a) For each procedure, explain the weakness in internal control, and identify the control princi- ple that is violated. (b) For each weakness, suggest a change in procedure that will result in good internal control. E8-3B The following control procedures are used in Ally’s Antiques for cash disbursements. 1. The store manager approves all payments before she signs and issues checks. 2. The bookkeeper reconciles the bank statement and reports any discrepancies to the owner. 3. Andy drops off new antiques on the loading dock. They are processed throughout the week and brought in to the store. 4. The company checks are unnumbered. 5. After payment, bills are filed in a paid invoice folder. Instructions (a) For each procedure, explain the weakness in internal control, and identify the internal con- trol principle that is violated. (b) For each weakness, suggest a change in the procedure that will result in good internal control. E8-4B At LeAnn Company, checks are not prenumbered because both the purchasing agent and the treasurer are authorized to issue checks. Each signer has access to unissued checks kept in an unlocked file cabinet.The purchasing agent pays all bills pertaining to goods purchased for resale. Prior to payment, the purchasing agent determines that the goods have been received and verifies the mathematical accuracy of the vendor’s invoice. After payment, the invoice is filed by vendor, and the purchasing agent records the payment in the cash disbursements journal. The treasurer pays all other bills following approval by authorized employees. After payment, the treasurer
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

ch08 - Exercise Set B - Chapter 8 EXERCISES: SET B E8-1B...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online