Exercise 7-5 Listed below are five procedures followed by Eikenberry Company. 1.

Question

Exercise 7-5 Listed below are five procedures followed by Eikenberry Company. 1. Several individuals operate the cash register using the same register drawer. 2. A monthly bank reconciliation is prepared by someone who has no other cash responsibilities. 3. Joe Cockrell writes checks and also records cash payment journal entries 4. One individual orders inventory, while a different individual authorizes payments 5. Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording 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. Procedure IC Good or Weak? Related Internal Control Principle 1. 2. 3. 4. 5. LINK TO TEXT LINK TO TEXT

Explanation / Answer

Procedure IC good or weak? Related internal control principle 1. Weak Establishment of Responsibility 2. Good Independent Internal Verification 3. Weak Segregation of Duties 4. Good Segregation of Duties 5. Weak Documentation Procedures

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