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 is an example of an internal control related to the handling of checks?

Allowing employees to sign blank checks for convenience

Permitting the same employee to prepare, sign, and record checks

Storing signed checks in an unlocked drawer

Requiring two authorized signatures on checks above a certain amount

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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 internal controls related to the handling of checks.

Analyze the options provided: Review each option to determine whether it aligns with the principles of internal controls. For example, allowing employees to sign blank checks or permitting the same employee to prepare, sign, and record checks violates segregation of duties, a key internal control principle.

Identify the principle of segregation of duties: This principle ensures that no single individual has control over all aspects of a financial transaction. It reduces the risk of errors or fraud. Requiring two authorized signatures on checks above a certain amount is an example of segregation of duties.

Evaluate the importance of securing assets: Storing signed checks in an unlocked drawer is a violation of internal controls because it does not safeguard the company's assets. Proper storage and restricted access are essential to prevent unauthorized use.

Conclude that requiring two authorized signatures on checks above a certain amount is the correct example of an internal control. This practice ensures oversight and reduces the risk of fraud or errors in the handling of checks.