Response to the following problem:
The following situations describe two equipment purchases and two cash receipts. In each pair, one situation's internal controls are much better than the other. Evaluate the internal controls in each situation as strong or weak, and give the reason for your answers.
Equipment Purchases:
a. Centennial Homes policy calls for construction supervisors to request the equipment needed for construction jobs. The home office then purchases the equipment and has it shipped to the construction site.
b. Wayside Construction Company policy calls for project supervisors to purchase the equipment needed for construction jobs. The supervisors then submit the paid receipts to the home office for reimbursement. This policy enables supervisors to get the equipment they need quickly and keep construction jobs moving along.
Cash Receipts:
a. Cash received by mail goes straight to the accountant, who debits Cash and credits Accounts Receivable to record collections from customers. The accountant then deposits the cash in the bank.
b. Cash received by mail goes to the mail room, where a mail clerk opens envelopes and totals the cash receipts for the day. The mail clerk forwards customer checks to the treasurer for deposit in the bank and forwards the remittance slips to the accounting department for posting credits to customer accounts.