Chapter 4 discussed Cash and Internal Controls.This assignment will use the cont

Question

Chapter 4 discussed Cash and Internal Controls.This assignment will use the control activities found on pages 172-173. Select a business you would like to own. Next select three internal controls you would implement into your business. Then list the reasons of why you think those internal controls are important within your business. What would the benefits be? Make sure you state whether the control is preventive or detective. Lastly, you should respond to two other students' threads. In your reply please list another control that would benefit that student's selected business. Remember to remain professional. For example, I would like to own a children's boutique.Implementing segregation of duties would be very beneficial preventative control. It would help safeguard my store's inventory, I would make sure the person entering in the invoice is separate from the employee receiving the inventory. Secondly, I would implement the detective control of reconciliations. Between shifts, I would have employees switch cash drawers. This will pinpoint at what times my store may be experiencing a loss in cash. I believe another detective control I would like to implement would be information and communication. I would have an employee bulletin board in the break room. This would be a designated area to inform employees of any new policies. If employees know what is expected, it is more common for them to follow the rules. An example of a sufficient reply to a student would be: You listed great examples. I believe another internal control that could help your business is to use the preventative control physical inventory. 3

Explanation / Answer

A business I would like to own is that of a designer jeweller boutique. The jewellery would be made of precious stones and pearls.

The three internal controls and their importance in my business is listed below:

- I would first install a CCTV in my boutique. This will be an important preventive control as the items are small and can be easily stolen. Even a small piece of jewellery can cost me a lot of money.

- I would ensure that any purchase requisition for purchase and jewels is verified by two layers i.e. the commercial department and finance department, This would be an important preventive control to ensure that the raw material is obtained at the appropriate price.

- Once a month, a valuation of inventory in stock shall be undertaken to ensure that no fakes exist. This shall be an important detective control to identify any copies that may have replaced the original by employees.

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