Chap008 Solution Manual

2 electronic detection devices stationed at entrances

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2. Electronic detection devices stationed at entrances or anti-theft devices on merchandise that must be removed by cashier with special equipment. 3. Security cameras. 4. Security guards. 5. Cash registers. 6. Separate cash drawers or transaction codes to identify clerks at registers. 7. Bar coding on merchandise. 8. Limited number of apparel items allowed in a dressing room. 9. Dressing room attendants. 10. A security safe on the premises. 11. Timeclocks. 8-38
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Chapter 08 - Cash and Internal Controls Entrepreneurial Decision BTN 8-7 1. Seven principles of internal control along with examples are: a. Establish responsibilities . The clerks at the counter should be responsible for handling cash. The other employees should be responsible for preparing the orders and helping customers. There also should be employees assigned responsibilities such as maintaining inventories, cleaning premises, clerical duties, locking doors, etc. b. Maintain adequate records . The clerks at the counter should enter all sales on the cash registers. The cash registers should include a locked record of all sales rung up for subsequent verification procedures. Other records should include those for inventories, supplies, payroll time records, and so on. c. Insure assets and bond key employees . The owner should acquire insurance for the employees and the physical facilities. Insurance should also be acquired for potential casualties such as a customer slipping on the floor. d. Separate recordkeeping from custody of assets . The employee who is responsible for food preparation and inventory should not be in control of the recordkeeping for the inventory. Similar separation should exist for all important assets. e. Divide responsibility for related transactions . The employee responsible for ordering inventory should be separate from the employee controlling inventory who should also be separate from the employee who pays for inventory. f. Apply technological controls . The owner should invest in technological controls such as cash registers, time clocks, security cameras, and other devices to reduce the risk of fraud or theft. g. Perform regular and independent reviews . The owner should implement regular reviews of all operating and control procedures. 2. As the business grows, controls will become more important. She will have more employees and will have to delegate more responsibilities. Strong controls will be important to make sure that the business is not a victim of fraud or employee errors. 8-39
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Chapter 08 - Cash and Internal Controls Hitting the Road BTN 8-8 No formal solution exists for this activity. It is usually interesting for the class to exchange their discoveries via class discussion. This is particularly the case with respect to popular college service/product centers. Common controls found in college units include: 1. Door locks and roll-down screens for after-hours lock-up.
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