The bookkeeper at Small Company will retire next week after more than 30 years with the store,

Question:

The bookkeeper at Small Company will retire next week after more than 30 years with the store, having been hired by the father of the store's present owner. She has always been a very dependable employee, and as a result has been given more and more responsibilities over the years. Actually, for the past 15 years, she has "run" the store's office, keeping books, verifying invoices, and issuing checks in their payment, which in the absence of the store's owner, Sally Ennis, she could sign. In addition, at the end of each day, the store's salesclerks turn over their daily cash receipts to the bookkeeper. After counting the money and comparing the amounts with the cash register tapes, which she is responsible for removing from the cash registers, she makes the journal entry to record cash sales and then deposits the money in the bank. She also reconciles the bank balance with the book balance of cash each month.

Mrs. Ennis, the store's owner, realizes she cannot expect a new bookkeeper to accomplish as much as the old bookkeeper. And since the store is not large enough to warrant more than one office employee, she recognizes she must take over some of the old bookkeeper's duties when she retires. Mrs. Ennis already places all orders for merchandise and supplies and closely supervises all employees and does not want to add more to her duties than necessary.

Name the internal control principle violated here and tell which of the old bookkeeper's tasks should be taken over by Mrs. Ennis in order to improve the store's internal control over cash.

Provocative Problem 6-2 Sporting Goods Company (L.O. 1, 2)

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Accounting

ISBN: 9780256091939

5th Edition

Authors: Kermit D. Larson, Paul B. W. Miller

Question Posted: