Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Five Components of Internal Controls

Financial Accounting

6. Internal Controls and Reporting Cash

Five Components of Internal Controls

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Multiple Choice

Which of the following internal control procedures should be implemented to control cash?

Segregation of duties between cash handling and recordkeeping

Recording cash transactions only at the end of the month

Allowing a single employee to both receive and deposit cash

Permitting unrestricted access to cash by all employees

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Verified step by step guidance

Understand the concept of internal controls: Internal controls are processes and procedures implemented by a company to safeguard its assets, ensure the accuracy of financial records, and promote operational efficiency. In this case, the focus is on controlling cash.

Identify the key principle of segregation of duties: Segregation of duties is a critical internal control procedure that ensures no single individual has control over all aspects of a financial transaction. This reduces the risk of errors or fraud.

Evaluate the options provided: Analyze each option to determine whether it aligns with the principle of segregation of duties and other sound internal control practices.

Option 1: 'Segregation of duties between cash handling and recordkeeping' aligns with internal control principles because it separates responsibilities, reducing the risk of fraud or errors.

Options 2, 3, and 4: 'Recording cash transactions only at the end of the month,' 'Allowing a single employee to both receive and deposit cash,' and 'Permitting unrestricted access to cash by all employees' are poor practices because they increase the risk of errors, fraud, and lack of accountability.