I need One Page Initial Post and two replies on other students post. I attached the reply document which contains the post of other students, Need it by by night. Instruction: Now that you have voted
Post 1
Internal control is an effective tool which ensures efficient operational activities, compliance with law rules & regulations, and reliability of financial reporting which represents truthfulness of financial data and information of business entity. No doubt, the implementation of Internal control is costly due to the implementation of policies & procedures and other necessary technology at workplace but internal control enables business to prevent and detection of errors and fraud, prevention of wastes and inefficiency and safeguarding the assets of the business from misuse & theft, and provides effective guidelines for sound decision making. I would say the presence of effective internal control is inevitable and indispensable for the smooth and effective running of operational activities as well as it is in the best interest of the business and its shareholders.
Due to business competition in the market, every company put extra efforts to increase its sales volume either by cash or credit to generate revenue to increase the profitability of the business, so the company doesn’t mind to sale on account or on credit. “A receivable occurs when a business sells goods or services to another party on account (on credit)” (Nobles et al., 2015). A business that sells goods or provides services on credit or on account receive cash through the mail or by online payments (EFT), therefore internal control over collection against credit sale is critical. At any workplace, a critical element of internal control is the segregation of cash-handling and cash-accounting duties. To increase the sales collection, most companies have a separate credit department to access customer’s credit applications to see whether they meet or not credit approval standards of the company. This is due to not lose sales and to avoid receivables that will never be collected. Separation and segregation of duties must be maintained over the cash collections from receivables is a good example of internal control. The credit department and its employees should have no access and authority over the cash and those who are involved in cash sales should not be authorized or in a position to grant credit to customers. If the person working in the credit department handles cash, there is a possibility that he or she could pocket money received from a customer and could then tag the customer’s account as uncollectible, as a result, the company would stop billing that customer, consequently the employee may have covered his or her theft and as a result company will lose further sales of the business which can damage ratio of sales turnover and reduce profitability of the business.
References:
Nobles, T. L., Mattison, B. L., & Matsumura, E. M. (2015). Horngren’s Accounting, 11th Edition. Retrieved from: https://online.vitalsource.com/#/books/9780133867411/cfi/6/262!/[email protected]:0
Post 2
A receivable happens when a company sells goods or services to a different party on account (Miller-Nobles, Mattison, & Matsumura, 2016). This means the company has the right to receive cash in the future from a present transaction. This would be an asset as it is something that a company owns. Each transaction involves two sides- creditor and debtor (Miller-Nobles, Mattison, & Matsumura, 2016). I have voted to have separate parties handle cash receipts and grant credit to customers. These need to have two different people doing these duties to avoid fraud. As our book states “a critical element of internal control is the separation of cash-handling and cash-accounting duties (Miller-Nobles, Mattison, & Matsumura, 2016).”
In the credit department, it should not have access to cash, and the people that handle the cash should not be able to give credit out to customers (Miller-Nobles, Mattison, & Matsumura, 2016). If the same person has access to bothj then they would be able to take the money that is received from a customer and would label the account as uncollectible and that company would stop billing that customer (Miller-Nobles, Mattison, & Matsumura, 2016). This is why it is important to have good internal control with a business.
Miller-Nobles, T. L., Mattison, B. L., & Matsumura, E. M. (2016). Horngren's Accounting (11 ed.). Pearson Education.
