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 internal control procedure designed to protect cash receipts?

Allowing employees to deposit cash at their discretion

Segregation of duties so that the person receiving cash is different from the person recording the transaction

Permitting a single employee to handle all aspects of cash management

Recording cash receipts only at the end of the month

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Verified step by step guidance

Understand the concept of internal control procedures: Internal controls are processes and policies implemented by an organization to safeguard assets, ensure accurate financial reporting, and promote operational efficiency. In this case, the focus is on protecting cash receipts.

Identify the key principle of segregation of duties: Segregation of duties is a fundamental 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.

Analyze the options provided: Evaluate each option to determine whether it aligns with the principle of segregation of duties or other internal control procedures. For example, allowing employees to deposit cash at their discretion or permitting a single employee to handle all aspects of cash management increases the risk of fraud or errors.

Focus on the correct procedure: Segregation of duties ensures that the person receiving cash is different from the person recording the transaction. This separation creates a system of checks and balances, reducing the likelihood of misappropriation or inaccurate recording.

Conclude why the correct answer is appropriate: Recording cash receipts only at the end of the month is not an effective control procedure because it delays accountability and increases the risk of errors. Segregation of duties is the most effective internal control procedure for protecting cash receipts.