BUSINESS

Exercise 7-4

The following control procedures are used in Penny’s Boutique Shoppe for cash disbursements.

(a) For each procedure, explain the weakness in internal control and identify the internal control principle that is violated.

Procedure Weakness Principle Violated
1. Each week, 100 company checks are left in an unmarked envelope on a shelf behind the cash register. http://edugen.wileyplus.com/edugen/art2/common/pixel.gif   http://edugen.wileyplus.com/edugen/art2/common/pixel.gif
2. The store manager personally approves all payments before she signs and issues checks. http://edugen.wileyplus.com/edugen/art2/common/pixel.gif http://edugen.wileyplus.com/edugen/art2/common/pixel.gif
 
3. The store purchases used goods for resale from people that bring items to the store. Since that can occur anytime that the store is open, all employees are authorized to purchase goods for resale by issuing cash from the register. The purchase is documented by having the store employee write on a piece of paper a description of the item that was purchased and the amount that was paid. The employee then signs the paper and puts it in the register. http://edugen.wileyplus.com/edugen/art2/common/pixel.gif http://edugen.wileyplus.com/edugen/art2/common/pixel.gif
http://edugen.wileyplus.com/edugen/art2/common/pixel.gif http://edugen.wileyplus.com/edugen/art2/common/pixel.gif
4. After payment, bills are “filed” in a paid invoice folder. http://edugen.wileyplus.com/edugen/art2/common/pixel.gif http://edugen.wileyplus.com/edugen/art2/common/pixel.gif
5. The company accountant prepares the bank reconciliation and reports any discrepancies to the owner. http://edugen.wileyplus.com/edugen/art2/common/pixel.gif http://edugen.wileyplus.com/edugen/art2/common/pixel.gif

 

http://edugen.wileyplus.com/edugen/art2/common/pixel.gif

 

http://edugen.wileyplus.com/edugen/art2/common/pixel.gif

 

http://edugen.wileyplus.com/edugen/art2/common/pixel.gif
By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor.
Question Attempts: 0 of 3 used   SAVE FOR LATER SUBMIT ANSWER
http://edugen.wileyplus.com/edugen/art2/common/pixel.gif

http://edugen.wileyplus.com/edugen/art2/common/pixel.gif

 

 

http://edugen.wileyplus.com/edugen/art2/common/pixel.gif

Order now and get 10% discount on all orders above $50 now!!The professional are ready and willing handle your assignment.

ORDER NOW »»