Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 48

Evaluating Internal Control Strengths and Weaknesses in Cash Receipts and Disbursements
The following procedures are used by The Taco Shop.
a. Customers pay cash for all food orders. Cash is placed in a cash register and a receipt is issued upon request by the customer.
b. At the end of each day, the cashier counts the cash, prepares a cash count sheet, and has the manager review and sign the cash count sheet.
c. At three times during the day, excess cash is removed from the cash registers and placed in a vault until it is taken for night deposit at the local bank.
d. Orders for drink cups, straws, condiments, and other supplies are written on prenumbered purchase order forms and are approved by the manager before being sent to an authorized supplier.
e. Wien supplies are received, they are stacked just inside the back door to the kitchen, which is left unlocked because part-time employees frequently arrive and leave at various times during the day.
Required:
1. Indicate whether each procedure represents a strength or weakness. Explain your reasons.
2. For each weakness, describe a change in procedures that would address the weakness.