Matching
Following are a number of potential misstatements that might occur in the revenue cycle. Also listed are a number of necessary controls for this cycle. For each potential misstatement, indicate, using the assigned letter, the necessary control that would most likely prevent or detect the misstatement.
Premises:
Cash may not be deposited intact daily.
Receipts may be posted to the Wrong customer account.
Mail receipts may be lost or misappropriated after receipt.
Some receipts may not be recorded.
Errors may be made in journalizing receipts.
Errors may be made in recording cash receipts.
Cash sales may not be registered.
Remittance advices may not agree with the prelist.
Cash receipts may not be recorded or may be posted to the wrong accounts.
Cash and checks received for deposit may not agree with the cash count sheets and prelist.
Responses:
Independent check of agreement of cash and checks with cash count sheets and prelist.
Management actively follow up on past due receivables.
Computer comparison of information included in cash receipts journal with information from prelist.
Mailing of statements to customers.
Independent check of agreement of remittance advices with prelist.
Use of cash registers or point-of-sale devices.
Restrictive endorsement of checks immediately on receipt.
Independent check of agreement of validated deposit slip with daily cash summary.
Computer agreement of amounts journalized and posted with daily cash summary.
Preparation of periodic bank reconciliations.
Correct Answer:
Premises:
Responses:
Receipts may be posted to the Wrong customer account.
Mailing of statements to customers.
Cash may not be deposited intact daily.
Independent check of agreement of validated deposit slip with daily cash summary.
Some receipts may not be recorded.
Computer agreement of amounts journalized and posted with daily cash summary.
Mail receipts may be lost or misappropriated after receipt.
Restrictive endorsement of checks immediately on receipt.
Errors may be made in recording cash receipts.
Computer comparison of information included in cash receipts journal with information from prelist.
Errors may be made in journalizing receipts.
Preparation of periodic bank reconciliations.
Remittance advices may not agree with the prelist.
Independent check of agreement of remittance advices with prelist.
Cash sales may not be registered.
Use of cash registers or point-of-sale devices.
Cash and checks received for deposit may not agree with the cash count sheets and prelist.
Independent check of agreement of cash and checks with cash count sheets and prelist.
Cash receipts may not be recorded or may be posted to the wrong accounts.
Management actively follow up on past due receivables.
Premises:
Receipts may be posted to the Wrong customer account.
Cash may not be deposited intact daily.
Some receipts may not be recorded.
Mail receipts may be lost or misappropriated after receipt.
Errors may be made in recording cash receipts.
Errors may be made in journalizing receipts.
Remittance advices may not agree with the prelist.
Cash sales may not be registered.
Cash and checks received for deposit may not agree with the cash count sheets and prelist.
Cash receipts may not be recorded or may be posted to the wrong accounts.
Responses:
Mailing of statements to customers.
Independent check of agreement of validated deposit slip with daily cash summary.
Computer agreement of amounts journalized and posted with daily cash summary.
Restrictive endorsement of checks immediately on receipt.
Computer comparison of information included in cash receipts journal with information from prelist.
Preparation of periodic bank reconciliations.
Independent check of agreement of remittance advices with prelist.
Use of cash registers or point-of-sale devices.
Independent check of agreement of cash and checks with cash count sheets and prelist.
Management actively follow up on past due receivables.
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