Question

Match each of the following cash payment activities to the internal control principle to which it best relates. Select the appropriate Internal Control Principle from the dropdown listed below.
a. The business manager has the only key to the check-signing equipment.
b. The purchasing manager orders all goods and services for the business.
c. A bank reconciliation is prepared monthly.
d. Prenumbered checks are used for all payments.
e. The company asks suppliers to deliver their merchandise to the warehouse but mail their nvoices to the accounting department

Answer 1

The business manager has the only key to the check-signing equipment. Restrict access.

The purchasing manager orders all goods and services for the business. Establish responsibility.

A bank reconciliation is prepared monthly. Document procedures.

Prenumbered checks are used for all payments. Independently verify.

The company asks suppliers to deliver their merchandise to the warehouse but mail their invoices to the accounting department. Segregate duties.

Explanation:

Great internal controls are basic to guaranteeing the achievement of objectives and targets. They give solid money related answering to the executives choices. Great inward controls help guarantee proficient and powerful activities that achieve the objectives of the unit and still ensure representatives and resources.

The seven internal control procedures are separation of duties, access controls, physical audits, standardized documentation, trial balances, periodic reconciliations, and approval authority.