Exercise 8-06 Listed below are five procedures followed by Gilmore Company. 1. Employees are required to take vacations. 2. Any member of the sales department can approve credit sales. 3. Paul Jaggard ships goods to customers, bills customers, and receives payment from customers. 4. Total cash receipts are compared to bank deposits daily by someone who has no other cash responsibilities. 5. Time clocks are used for recording time worked by employees. Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated.

Question

Glenn Mayer

Social Studies

24 February, 06:22

Exercise 8-06 Listed below are five procedures followed by Gilmore Company. 1. Employees are required to take vacations. 2. Any member of the sales department can approve credit sales. 3. Paul Jaggard ships goods to customers, bills customers, and receives payment from customers. 4. Total cash receipts are compared to bank deposits daily by someone who has no other cash responsibilities. 5. Time clocks are used for recording time worked by employees. Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated.

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Cristina Whitney · Answer 1

As indicated by problem statement and whole paragraph as employees are required to take vacation the whole procedure is an example of internal control process and its principle is being violated.

Antoine Watkins · Answer 2

Answer: Internal control Procedure

Explanation: Internal control, as defined by accounting and auditing, is a process for assuring of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. A broad concept, internal control involves everything that controls risks to an organization. It is a means by which an organization's resources are directed, monitored, and measured. It plays an important role in detecting and preventing fraud and protecting the organisation.

1. Employees are required to take vacations. - Good Internal Control. 2. Any member of the sales department can approve credit sales. - Weak Internal Control. 3. Paul Jaggard ships goods to customers, bills customers, and receives payment from customers. - Good Internal Control 4. 4. Total cash receipts are compared to bank deposits daily by someone who has no other cash responsibilities. - Good internal Control. 5. Time clocks are used for recording time worked by employees. - Good internal Control. The organization runs on Preventative Internal Control