Question

peach transaction, suggest two internal controls you would implement. Justify your response. Here's an example to guide you: ·

Transaction: Big Marker purchased supplies on account, $100.

Business process: Acquisition/ payment.

Journal entry: Debit Supplies $100. Credit Accounts Payable $100.

please answer this

Elements: Supply is an asset; accounts payable, a liability

Forms: Purchase requisition and purchase order.

Additional information: name of the primary contact person at the vendor, sp type and quantity of supplies purchased (e.g., 10 boxes of paper clips)

Internal controls: Transaction authorizations would ensure that only the Pur department can issue purchase orders. Sending a blind copy of the purchase e Receiving department would aid in the segregation of duties.

Answer 1

Below are the two internal controls I would suggest to be added to the given process.

1. After the purchase requisition is raised by the manufacturing departments, the same has to be authorized by the manager of manufacturing department.

This will increase the control over the quantities and types of products which are to be ordered.

2. Purchase order is to be closed only upon receipt of delivery challan from stores. This will ensure the goods are received and the company is liable to pay the amount.