《financial Accouning, 9e财务会计 Warren》ch05.pptVIP

Objectives of Internal Control 1. assets are safeguarded and used for business purposes. 2. business information is accurate. 3. employees comply with laws and regulations. Elements of Internal Control 1. Control environment 2. Risk assessment 3. Control procedures 4. Monitoring 5. Information and communication Control Procedures Competent Personnel Rotating Duties Mandatory Vacations Separating Responsibilities for Related Operations Separating Operations, Custody of Assets, and Accounting Proofs and Security Measures Separating Responsibilities for Related Operations 1. Orders may be placed on the basis of friendship with a supplier, rather than on price, quality, and other objective factors. 2. The quantity and quality of supplies received may not be verified, thus causing payment for supplies not received or poor-quality supplies. 3. Supplies may be stolen by the employee. 4. The validity and accuracy of invoices may be verified carelessly. Clues to Potential Problems 1. Abrupt changes in lifestyle. 2. Close social relationships with suppliers. 3. Refusing to take a vacation. 4. Frequent borrowing from other employees. 5. Excessive use of alcohol or drugs. The Cash Receipts Journal PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount Page 11 Mar. 3 Howard Supplies 600 600 2006 7 Donnelly Supplies 420 420 Journalizing in the Purchases Journal PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount Page 11 Mar. 3 Howard Supplies 600 600 2006 On March 12, NetSolutions purchased office equipment from Jewett Business Systems, $2,800. 7 Donnelly Supplies 420 420 12 Jewett Bus. Sys. 2,800 Off. Equip. 2,800 Because there isn’t a special column for Office Equipment, this purchase was recorded under “Other Accounts Dr.” Journalizing in the Purchases Journal PURCHASES JOURNAL Accts. Other Post Payable Supplies