Question

Listed below are five procedures followed by Eikenberry 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. Joe Cockrell writes checks and also records cash payment 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. Indicate whether each procedure is an example of good internal control or of weak internal control. 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.

Answer 1

Answer:please see below for answes

Explanation:

1. Several individuals operate the cash register using the same register drawer--- Weak Internal control --- Establishment of responsibilities is violated.

2. A monthly bank reconciliation is prepared by someone who has no other cash responsibilities-----Good---The procedures follows independent internal verification.

3. Joe Cockrell writes checks and also records cash payment entries.-----Weak Internal control ------Segregation of duties is violated

4. One individual orders inventory, while a different individual authorizes payments.---- Good---- The procedures follow the Segregation of duties .

5. Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording.---- Weak-----The procedure here does not follow good documentation and procedures.

----Internal controls are measures laid out by companies to ensure its employees are compliant in following set regulations and standards to ensure financial reports are not manipulated and promoting effective operations in order safeguard it's assets from unauthorized use or theft.

Some internal controls include Segregation of duties, documentation procedures, proper authorization, establishment of responsibilities etc.