Accounting Assignment 8.1 Handout

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Assignment 8.1 Handout

1. Internal controls are designed to safeguard assets, encourage employees to follow company

policies, promote operational efficiency, and ensure accurate accounting records.

Requirements:

R1. Which objective is most important?

R2. Which must the internal controls accomplish for the business to survive? Give your reason.

2. The Sarbanes-Oxley Act affects public companies.

Requirement

R1. How does the Sarbanes-Oxley Act relate to internal controls? Be specific.

3. Separation of duties is a key internal control.

Requirement

R1. Explain in your own words why separation of duties is often described as the cornerstone of

internal control for safeguarding assets. Describe what can happen if the same person has

custody of an asset and also accounts for the asset.

4. There are 5 characteristics identified in the chapter as pitfalls of e-commerce.

Requirement

R1. List the 5 characteristics identified in the chapter as pitfalls of e-commerce.

5. Answer the following questions about the controls in bank accounts:

Requirements

R1. Which bank control protects against forgery?

R2. Which bank control reports what the bank did with the customer’s cash each period?

R3. Which bank control confirms the amount of money put into the bank?