PR 8-1b Evaluating internal control of cash ObJ. 2, 3 The following procedures were recently installed by...

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Accounting

PR 8-1b Evaluating internal control ofcash ObJ. 2, 3 The following procedures were recently installed by TheChina Shop: a. All sales are rung up on the cash register, and areceipt is given to the customer. All sales are recorded on arecord locked inside the cash register.b. Each cashier is assigned a separate cash register drawer to whichno other cashier has access. c. At the end of a shift, each cashiercounts the cash in his or her cash register, unlocks the cashregister record, and compares the amount of cash with the amount onthe record to determine cash shortages and overages. d. Checksreceived through the mail are given daily to the accountsreceivable clerk for recording collections on account and fordepositing in the bank. e. Vouchers and all supporting documentsare perforated with a PAID designation after being paid by thetreasurer. f. Disbursements are made from the petty cash fund only after a pettycash receipt has been completed and signed by the payee. g. Thebank reconciliation is prepared by the cashier. InstructionsIndicate whether each of the procedures of internal control overcash represents (1) a strength or (2) a weakness. For eachweakness, indicate why it exists.

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Companies also need control over cash disbursements Sine a company spends most of its cash by check many of the internal controls for cash disbursement deals with checks and authorisation of cash payment Arrange duties so that the employee who authorizes payment of a bill does not sign checks Here are five items to be consider when evaluating the internal controls over cash disbursements 1 Segregation of duties The foundaton of a good internal control system is segregation of duties The duties of authorization and recordkeeping In this case record keeping clerk should be separated so that one individual cannot complete a transaction from start to finish The concept behind the segregation of duties is that in order to misappropriate cash individuals would have to collude rather than one individual acting alone For many businesses proper segregation of duties can be difficult to achieve In these instances comany owners may want to consider the bank statement deliver to them unopened The owners should then review the bank statements and checks See Answer

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PR 8-1b Evaluating internal control of cash ObJ. 2, 3 The following procedures were recently installed by...

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Accounting

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