Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 7 - Fraud, Internal Control, and Cash - Exercises: E7-2

Answer

The Six principles of internal control are as follows: a) Establishment of responsibility b) Segregation of duties c) Documentation procedures d) Physical controls e)Independent internal verification f) Human resource controls

Work Step by Step

a) Each employee is responsible for his job. b) A work of one employee is supervised / completed by other employee - The employee who makes the Pizza cannot exchange it with cash from the customer. c) Sales slips are serially numbered and properly accounted, before the sale is completed. d) Physical control of assets for their security. e) A system, which allows periodical checking of all the accounting records and verification of assets / asset / inventory. f) To control the employees, by different methods.
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