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

Principles of Control Activities

Financial Accounting

6. Internal Controls and Reporting Cash

Principles of Control Activities

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Multiple Choice

Which of the following statements about the principles of internal control is INCORRECT?

Independent internal verification requires that employees responsible for transactions also review and approve their own work.

Documentation procedures require that companies use pre-numbered documents and account for all documents.

Segregation of duties means that no single employee should be responsible for both recording and processing a transaction.

Physical controls involve restricting access to assets and accounting records to authorized personnel only.

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Verified step by step guidance

Step 1: Understand the principles of internal control. Internal control principles are designed to safeguard assets, enhance the accuracy and reliability of accounting records, and ensure compliance with laws and regulations. Common principles include segregation of duties, documentation procedures, physical controls, and independent internal verification.

Step 2: Analyze the principle of independent internal verification. This principle requires that an independent party reviews and approves transactions to ensure accuracy and prevent errors or fraud. It is incorrect to state that employees responsible for transactions should also review and approve their own work, as this violates the independence requirement.

Step 3: Examine the principle of documentation procedures. This principle requires companies to use pre-numbered documents and account for all documents to ensure completeness and accuracy in record-keeping. This statement is correct and aligns with internal control principles.

Step 4: Review the principle of segregation of duties. This principle ensures that no single employee is responsible for both recording and processing a transaction, reducing the risk of errors or fraud. This statement is correct and aligns with internal control principles.

Step 5: Evaluate the principle of physical controls. Physical controls involve restricting access to assets and accounting records to authorized personnel only, safeguarding company resources. This statement is correct and aligns with internal control principles.