What financial statistic or statistics would be distorted


Same works for Click KlaK Company. Click Klak is a reasonably large general merchant with cash sales of about $50,000 each week. Sometimes, when Sam collects cash from a customer, he issues (after the customer has left) a sales return allowance for $50 or $100. He then removes and steals $50 or $100 from the cash register. He has been doing this very effectively every week for the last three years - stealing about $3,000 each year. Sam's greed has grown and in the most recent 3 month period, Sam has been stealing $100 to $300 each day using this same technique. Everything balances because the missing debit to cash is offset by the sales allowance debit. What internal control principle is being violated? What financial statistic or statistics would be distorted by this arrangement? If you were management, what internal controls would you implement to prevent this from happening?

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Accounting Basics: What financial statistic or statistics would be distorted
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