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Six Internal Control Principles Related to Cash Transactions Are Discussed

Question 232

Matching

Six internal control principles related to cash transactions are discussed in the textbook. Match the following applications related to cash receipts and cash disbursements to the principles.
(Note: Each code letter can be used once, more than once, or not at all.)

Premises:

Responses:

Only the treasurer should be authorized to sign checks.

Establishment of responsibility

All personnel who handle cash should be bonded.

Segregation of duties

Blank checks should be stored in a safe, and access should be restricted.

Documentation procedures

Each check should be compared with approved invoices before being issued.

Physical controls

The duties of approving an item for payment and paying the item should be performed by different individuals.

Independent internal verification

All checks should be prenumbered.

Human resource controls

Cash register tapes should be used for over-the-counter receipts.

The duties of receiving and recording cash should be assigned to different individuals.

Daily cash counts should be made by cashier department supervisors.

Cash receipts should be deposited in bank in total daily.

Premises:

Only the treasurer should be authorized to sign checks.

All personnel who handle cash should be bonded.

Blank checks should be stored in a safe, and access should be restricted.

Each check should be compared with approved invoices before being issued.

The duties of approving an item for payment and paying the item should be performed by different individuals.

All checks should be prenumbered.

Cash register tapes should be used for over-the-counter receipts.

The duties of receiving and recording cash should be assigned to different individuals.

Daily cash counts should be made by cashier department supervisors.

Cash receipts should be deposited in bank in total daily.

Responses:

Establishment of responsibility

Segregation of duties

Documentation procedures

Physical controls

Independent internal verification

Human resource controls

Correct Answer:

Premises:

Responses:

Only the treasurer should be authorized to sign checks.

All personnel who handle cash should be bonded.

Blank checks should be stored in a safe, and access should be restricted.

Each check should be compared with approved invoices before being issued.

The duties of approving an item for payment and paying the item should be performed by different individuals.

All checks should be prenumbered.

Cash register tapes should be used for over-the-counter receipts.

The duties of receiving and recording cash should be assigned to different individuals.

Daily cash counts should be made by cashier department supervisors.

Cash receipts should be deposited in bank in total daily.