Should procedure change?
No cash register proof is prepared at the end of each day. The amount of money in the register is considered the amount of cash sales for the day. Why should the procedure change?
What is no guarantee that the money received is actually recorded?
A blank endorsement is made on all checks to be deposited. Would you change the procedure?
Blank endorsements are not considered secure, chances of misappropriation would exist
Why should management be concerned about having accurate information about the firm’s cash position available at all times?
Answer- What is to prevent embezzlement of cash and no miss utilization of cash.
A form of payment that is dated for some time in the future?
What is a post dated check.
Small payments are sometimes made from the currency and coins in the cash register. (The store has no petty cash fund.) Why should management change the procedure?
What is gap of control? This reduces fraudulent cash transactions
The checkbook is kept on top of a desk so that it will be handy. Would you change the procedure?
Books must be kept locked and only made to a specific employee for safety measures
Many banks now offer a variety of computer services to clients. Why is it not advisable for a firm to pay its bank to complete the reconciliation procedure at the end of each month?
What is losing control over checks and balances or the manage the activity?
A Check paid by the bank on which it was drawn.
what is cancelled check.
During busy periods for the firm, cash receipts are sometimes kept on the premises for several days before a bank deposit is made. Why should management change this procedure?
What is the increased possibility of theft?
The reconciliation process usually take place tow or three weeks after the bank statement is received. Would you change the procedure?
Required to detect frauds, segregation of duties result in internal control
How does management benefit when cash transactions are recorded quickly and efficiently?
(3 part answer) What is the cash position is kept up to date, decision making can be done effectively and efficiently, and future investments can be planned.
Most businesses use a record to record transactions involving petty cash.
What is a petty cash analysis sheet?
When funds are removed from the cash register at the end of each day, they are placed in an unlocked office cabinet until they are deposited.
What is the increased possibility of theft? Keeping money locked up is important to prevent theft from employees or strangers.
The bank statement and the canceled checks are thrown away after the reconciliation process is completed. Would you change the procedure?
Yes, there would be a higher chance of fraud and theft. This information should be kept private and locked away.
Why do some companies require that all employees who handle cash be bonded?
If the employees steal or mishandle cash, the business is insured against the loss.
Daniel used the business money for his personal use and not for the purpose of business. Is this ethical or an unethical action?
What is unethical? Daniel should appoint someone else to handle the petty cash.
The person who makes the bank deposits also records them in the checkbook, journalizes cash receipts, and reconciles the bank statement. Why should this procedure change?
What is the reason for the weakness in the internal control over the cash receipts? If available different people should be doing these duties.
The same person prepares bank deposits, issue checks and reconciles the bank statements. Would you change the procedure?
If all duties are given to a single person There would be a greater chance of fraud and person can manipulate the data during bank reconciliation
Why should management be concerned about achieving effective internal control over cash receipts and cash payments?
What is to have adequate controls over the cash receipts and payments in order to safeguard from theft and frauds by employees.
This voucher is used to record the payment made from the petty cash fund.
What is a Petty cash voucher?