DQ 1 Week 1 - combination and each of us had a personal pin...

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Consider how an organization must manage cash, receivables, and inventory. Which of the three current assets is the most important to manage? Is one more susceptible to fraud and errors than the others? Explain your answer. How would a misstatement in each affect the organization? I believe it is important for an organization to have internal controls in place to manage current assets such as cash, receivables, and inventory. The most important of these current assets to manage is cash. Cash is the most easily accessible to management and even employees. For this reason cash should be taken to the bank every day or put in a safe where only management have access to it. I used to work at a local brewpub and there were only four people who knew the safe
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Unformatted text preview: combination and each of us had a personal pin that we had to input when opening the safe. Another safeguard that was in place was that two managers had to be together when the safe was being opened. When cash is overstated the assets on the balance sheet are overstated and a company appears to more liquid than it truly is. If receivables were overstated it would also make a companys assets higher and give the investors the false sense that the company is able to collect on more accounts. If inventory is overstated it can also make a company look more profitable. It can do the opposite if the inventory is understated....
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This note was uploaded on 04/04/2012 for the course ACC 422 taught by Professor Susan during the Spring '08 term at University of Phoenix.

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