Acct555Hw6 Essay

2300 Words10 Pages
14-21 ( Objectives 14-3 , 14-4 , 14-5 , 14-6 ) The following questions deal with internal controls in the sales and collection cycle. Choose the best response. a. When a customer fails to include a remittance advice with a payment, it is common for the person opening the mail to prepare one. Consequently, mail should be opened by which of the following four company employees? (4) Receptionist b. A key internal control in the sales and collection cycle is the separation of duties between cash handling and record keeping. The objective most directly associated with this control is to verify that (4) existing cash receipts are recorded. c. Company personnel account for the sequence of shipping documents and verify that an entry for each shipment is included in the sales journal. This control relates most directly to the sales transaction-related audit objective of (1) occurrence. 14-22 ( Objectives 14-3, 14-4 ) For each of the following types of misstatements (parts a through d), select the control that should have prevented the misstatement: a. A manufacturing company received a substantial sales return in the last month of the year, but the credit memorandum for the return was not prepared until after the auditors had completed their testing. The returned merchandise was included in the physical inventory. (4) Receiving reports are prepared for all materials received and such reports are accounted for on a regular basis. b. Which of the following controls most likely will be effective in offsetting the tendency of sales personnel to maximize sales volume at the expense of high bad debt write-offs? (3) Employees involved in the credit-granting function are separated from the sales function. c. A sales invoice for $5,200 was computed correctly but, by mistake, was key-entered as $2,500 to the sales journal and to the accounts receivable master
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