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lara [203]
3 years ago
13

Tott Company has the following internal control procedures over cash disbursements. Identify the internal control principle that

is applicable to each procedure.
(a) Company checks are prenumbered.
(b) The bank statement is reconciled monthly by an internal auditor.
(c) Blank checks are stored in a safe in the treasurer’s office.
Business
1 answer:
frozen [14]3 years ago
5 0

Answer: a) Documentation Procedures

b) Independent Internal Verification

c) Physical Control

Explanation:

I'll list the internal control principle in bold letters and then explain them a little.

(a) Company checks are prenumbered. DOCUMENTATION PROCEDURES.

These are meant to provide a paper trail to identify the events that occur in a company and pre numbering check ensures that the number is always known.

(b) The bank statement is reconciled monthly by an internal auditor. INDEPENDENT INTERNAL VERIFICATION.

Here the company runs its own checks and balances to ensure that they are in good shape.

(c) Blank checks are stored in a safe in the treasurer’s office. PHYSICAL CONTROL.

This refers to the use of physical devices to keep documents and assets safe and can include safes, vaults and safety deposit boxes.

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Answer:

ABC, LLC

Classified balance sheet as at December 31, 2020

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ASSETS

Non - Current Assets

Land                                                                                 25,000

Total Non - Current Assets                                             25,000

Current Assets

Accounts Receivable                                                        3,000

Cash                                                                                 20,000

Total Current Assets                                                       23,000

TOTAL ASSETS                                                               48,000

EQUITY AND LIABILITIES

LIABILITIES

Non - Current Liabilities

Notes Payable (due in 5 years)                                      10,000

Total Non - Current Liabilities                                        10,000

Current Liabilities

Accounts Payable                                                            4,000

Salaries Payable                                                              5,000

Total Current Liabilities                                                   9,000

TOTAL LIABILITIES                                                         19000

EQUITY

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Preferred Stock                                                               8,000

Treasury Stock                                                                6,000

Retained Earnings                                                          7,000

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Paid in Capital in Excess of Par - Preferred Stock       2,000

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Explanation:

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