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

Fraud and the Fraud Triangle

Financial Accounting

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

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Multiple Choice

Which of the following would NOT represent good controls over cash receipts?

Using pre-numbered receipts for all cash transactions

Depositing cash receipts daily into the bank

Separating duties between employees who handle cash and those who record transactions

Allowing the same employee to both receive and record cash

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Understand the concept of internal controls over cash receipts. Internal controls are procedures and policies designed to safeguard assets, ensure accurate financial reporting, and prevent fraud.

Review the options provided in the problem. Each option represents a potential control measure for cash receipts, except for the last one, which is identified as the correct answer.

Analyze why each of the first three options represents good controls over cash receipts: (1) Using pre-numbered receipts ensures accountability and tracking of all cash transactions, (2) Depositing cash receipts daily minimizes the risk of theft or misplacement, and (3) Separating duties reduces the risk of fraud by ensuring no single employee has complete control over cash handling and recording.

Evaluate the last option: Allowing the same employee to both receive and record cash. This is NOT a good control because it creates an opportunity for fraud or errors to go undetected, as there is no oversight or separation of duties.

Conclude that the correct answer is the last option, as it violates the principle of segregation of duties, which is a fundamental aspect of effective internal controls.