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 NOT an appropriate internal control for cash receipts over the counter?

Requiring two employees to count cash at the end of each shift

Allowing the same employee to both receive cash and record transactions

Depositing cash receipts daily into the bank

Using cash registers that produce receipts for customers

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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 assets, ensure accurate financial reporting, and promote operational efficiency. For cash receipts, internal controls are designed to prevent theft, fraud, and errors.

Analyze the options provided: Review each option to determine whether it aligns with the principles of effective internal controls. Effective controls typically involve segregation of duties, regular reconciliation, and documentation.

Evaluate the first option: 'Requiring two employees to count cash at the end of each shift' is an appropriate internal control because it reduces the risk of theft or errors by involving multiple individuals in the process.

Evaluate the second option: 'Allowing the same employee to both receive cash and record transactions' is NOT an appropriate internal control. This violates the principle of segregation of duties, which is essential to prevent fraud or errors. One employee should not handle both receiving and recording cash.

Evaluate the remaining options: 'Depositing cash receipts daily into the bank' and 'Using cash registers that produce receipts for customers' are appropriate internal controls. Daily deposits reduce the risk of theft, and cash registers provide documentation for transactions.