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Chapter 6: 7E_3 (page 307)

The voucher system of control is designed to control cash disbursements and the acceptance of obligations.

3. When is the voucher initially prepared? Explain.

Short Answer

Expert verified

Answer

The voucher is first ready by the accounting office when it gets the purchase order from the department making the request and if it receives reliable evidence that an obligation has been caused.

Step by step solution

01

Step-by-Step SolutionStep 1: Introduction to topic

Voucher- A Voucher is a printed or written internal document supporting the passages in accounting books. It is treated as a redeemable transaction bond, has financial worth, and is valuable for specific purposes.

02

Preparation of Voucher-

The Preparation of Vouchers is a necessary part of any business. Vouchers work as evidence of a transaction between two parties, particularly during audits.

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Most popular questions from this chapter

For each of these five separate cases, identify the principle(s) of internal control that is violated. Recommend what the business should do to ensure adherence to principles of internal control.

1. Chi Han records all incoming customer cash receipts for her employer and posts the customer payments to their respective accounts.

Nolan Company deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on June 30, 2017, its Cash account shows a \(22,352 debit balance. Nolan’s June 30 bank statement shows \)21,332 on deposit in the bank. Prepare a bank reconciliation for the company using the following information.

e. The bank statement included a $23 credit for interest earned on the company’s cash in the bank.

An internal control system consists of all policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies. Evaluate each of the following statements and indicate which are true and which are false regarding the objectives of an internal control system.

3. The main objective of internal control procedures is best accomplished by designing an operational system with managerial policies that protect the assets from waste, fraud, and theft.

For each of these five separate cases, identify the principle(s) of internal control that is violated. Recommend what the business should do to ensure adherence to principles of internal control.

4. The owner of Super Pharmacy uses a check software/printer to prepare checks, making it difficult for anyone to alter the amount of a check. The check software/printer, which is not password protected, is on the owner’s desk in an office that contains company checks and is normally unlocked.

An internal control system consists of all policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies. Evaluate each of the following statements and indicate which are true and which are false regarding the objectives of an internal control system.

2. The primary objective of internal control procedures is to safeguard the business against theft from government agencies.
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