The following control procedures are used at Gonzales Company for - 12068

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E8-2

 

 

 
 

Your answer is correct.

 

 

The following control procedures are used at Gonzales Company for over-the-counter cash receipts.

Instructions

(a) For each procedure, explain the weakness in internal control, and identify the control principle that is violated.
(b) For each weakness, suggest a change in procedure that will result in good internal control.

  1. To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attaché case in the stock room until it is deposited in the bank.

(a) Weakness:

     Principle:

(b) Recommended Change:

  1. All over-the-counter receipts are registered by three clerks who use a cash register with a single cash drawer.

(a) Weakness:

      Principle:

(b) Recommended Change:

  1. The company accountant makes the bank deposit and then records the day's receipts.

(a) Weakness:

      Principle:

(b) Recommended Change:

  1. At the end of each day, the total receipts are counted by the cashier on duty and reconciled to the cash register total.

(a) Weakness:

      Principle:

(b) Recommended Change:

  1. Cashiers are experienced; they are not bonded.

(a) Weakness:

      Principle:

(b) Recommended Change:

 

 

 

 

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