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 reflects a weak internal control system?

All transactions are authorized and reviewed by supervisors.

Bank reconciliations are performed regularly by independent staff.

One employee is responsible for both recording and processing cash receipts.

Duties are clearly separated among employees.

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Verified step by step guidance

Understand the concept of internal control systems: Internal control systems are processes and procedures implemented by an organization to ensure the accuracy and reliability of financial reporting, safeguard assets, and promote operational efficiency.

Identify the characteristics of a strong internal control system: These include authorization and review of transactions, regular bank reconciliations by independent staff, clear separation of duties, and ensuring no single employee has control over multiple critical functions.

Analyze the options provided: Evaluate each statement to determine whether it reflects a strong or weak internal control system. For example, 'All transactions are authorized and reviewed by supervisors' and 'Duties are clearly separated among employees' are characteristics of strong internal controls.

Focus on the problematic scenario: The statement 'One employee is responsible for both recording and processing cash receipts' reflects a weak internal control system because it violates the principle of segregation of duties, increasing the risk of errors or fraud.

Conclude the analysis: Recognize that the lack of segregation of duties in the problematic scenario undermines the effectiveness of the internal control system, making it a weak point in the organization's financial processes.