Internal Control of Cash Payments is a small merchandising company with a manual

Question

Internal Control of Cash Payments is a small merchandising company with a manual accounting system. An investigation revealed that in spite of a sufficdlent bank balance, a significant amount of avallable cash discounts had been lost because of fallure to make timely payments. In addition, it was discovered that the invoices for several purchases had been paid twice. Indicate whether the procedures listed below for the payment of vendors' invoices would reduce the posibility of losing available cash discounts and of paying an invoice a second time. 1. Each voucher should be approved for payment by a designated official before verifying price, quantities, and terms. 2. Each voucher should be filed by the last day of the discount period or the due date if the invoice is not subject to a cash discount. 3. Each day, the vouchers should be removed from the appropriate section of the file and checks issued by the disbursing official 4. At the time of payment, all vouchers and supporting documents should be stamped or perforated "Paid"

Explanation / Answer

Internal control of cash payments 1 Reduce 2 No Impact 3 No Impact 4 Reduce Entires Based on Bank Reconciliation 1 Entry Required 2 No Entry 3 Entry Required 4 No Entry 5 No Entry 6 No Entry 7 Entry Required

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