Discussion Questions 1. (a) Name and describe the five elements of internal 4. Why should the responsibility for maintaining the control. (b) Is any one element of internal control more important than another? accounting records be separated from the respon sibility for operations? Explain. 2. Why should the employee who handles cash re- . Assume that Brooke Miles, accounts payable clerk ceipts not have the responsibility for maintaining the accounts receivable records? Explain The ticket seller at a movie theater doubles as a ticket taker for a few minutes each day while the ticket takere is on a break. Which control procedure of a business's system of internal control is violated in this situation? for West Coast Design Inc., stole $48,350 by pay ing fictitious invoices for goods that were never received. The clerk set up accounts in the names of the fictitious companies and cashed the checks at a local bank. Describe a control procedure that would have prevented or detected the fraud 3. as a ticket 396 Chapter 8 Sarbanes-Oxley, Internal Control, and Cash 6. Before a voucher for the purchase of merchandise is approved for payment, supporting documents should be compared to verify the accuracy of the liability. Give an example of supporting documents 9. Knott Inc. has a petty cash fund of $750. (a) Since the petty cash fund is only $750, should Knott Inc. implement controls over petty cash? (b) What controls, if any, could be used for the petty cash fund? supprting documentslog for the purchase of merchandise 7. The balance of Cash is likely to differ from the bank 0. ) How are cash equivalents reported in the finar statement balance. What two factors are likely to cial statements? (b) What are some examples of cash equivalents? be responsible for the difference? 8. What is the purpose of preparing a bank reconciliation