College Accounting 2nd Edition by David Haddock, John Price,Michael Farina

Exercise 11

The new accountant for Asheville Hardware Center, a large retail store, found the following weaknesses in the firm's cash-handling procedures. How would you explain to management why each of these procedures should be changed?
a. No cash register proof is prepared at the end of each day. The amount of money in the register is considered the amount of cash sales for the day.
b. Small payments are sometimes made from the currency and coins in the cash register. (The store has no petty cash fund.)
c. During busy periods for the firm, cash receipts are sometimes kept on the premises for several days before a bank deposit is made.
d. When funds are removed from the cash register at the end of each day, they are placed in an unlocked office cabinet until they are deposited.
e. The person who makes the bank deposits also records them in the checkbook, journalizes cash receipts, and reconciles the bank statement.