Problem: Listed below are five procedures followed by The Beat Company.
1. Several individuals operate the cash register using the same register drawer.
2. A monthly bank reconciliation is prepared by someone who has no other cash responsibilities.
3. Ellen May writes checks and also records cash payment journal entries.
4. One individual orders inventory, while a different individual authorizes payments.
5. Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording.
Instructions:
If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated. Use the table below.
Identify internal control weaknesses over cash disbursements and suggest improvements.
Identify internal control weaknesses for cash disbursements and suggest improvements.
Indicate whether procedure is good or weak internal control.
Procedure IC Good or Weak? Related Internal Control Principle
1.
2.
3.
4.
5.