Control Over Receipts and Payments

CONTROL OVER RECEIPTS

AND PAYMENTS

INTRODUCTION
Control over recording receipts and payments are extremely important so as to avoid fraud and to ensure
completeness. Businesses must ensure that
 All payments are properly authorized and proper checks are made against supporting documents
 Job rotations must be done
 Segregation of duties must be done
 Minimum number of cheque books must be used at a time
 Regular bank reconciliations must be done
 Sequence checks must be carried out
 The amount of money in the register must be checked with the till at the end of the day
 Access keys must be given to appropriate staff and they should be kept in a secure place
 Staff working on register must be observed regularly
 Accounting entries must be checked
 The person responsible for the petty cash may be given responsibility for authorization of all petty
cash claims up to a certain amount
 A director or chief accountant must be required to authorize all petty cash claims
The management and control of cash and cheques is of extreme importance in any business. It must be
ensured that cheques received and their supporting cheque guarantee cards are valid. It must be assured
that credit and debit cards are also valid. The person operating the cash register must be a responsible
and reliable one. We have also noted the importance of checking monies received to any supporting
documentation, checking the calculation of and entitlement to discounts and issuing written receipts.

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MULTIPLE CHOICE QUESTIONS

1. The sales manager has bought some club’s tickets to entertain party of new clients from abroad.
He has not receipt for the tickets, but wishes to be reimbursed and says that the sales director said
he should buy the tickets. Best practice is:
A. Not to pay him, as the transaction is not supported by appropriate documentation
B. To pay him anyway, without any supporting documentation, as it was obviously a valid
business expense
C. To pay him on production of a properly authorized cheque requisition form, without any other
receipt
D. Not to pay him as entertaining is not a valid business expense
2. A cheque is automatically printed by a computerized accounting system for a payment to be made
to supplier. How does this benefit the system?
A. It prevents fraud
B. There are unlikely to be technical mistakes on the cheque
C. The cheque does not require authorization
D. It saves the need to check and sign the cheque
3. Which legislation requires goods to be of satisfactory quality?
A. Contract law
B. Data protection law
C. Document retention law
D. Sale of goods legislation
4. Which method of payment should be used to make an immediate internet purchase?
A. Cash
B. Cheque
C. Credit card
D. Credit transfer
5. For what reason does a business try to ensure a segregation of duties in the accounts department?
A. To reduce the risk of fraud
B. The prevent individuals from being overworked
C. To maker supervision easier
D. To improve the cover for absentees
6. Which of the following is not an example of control over payments made by a business?
A. Security of adverse spending variance on a budget report
B. Ensuring each request for payment is supported by documentary evidence
C. Making sure each payment is authorized
D. Limiting the authority of persons approving payment
7. Which of the following is not a genuine reason for using a cheque requisition form to initiate a
payment?
A. Some creditors do not issue invoices
B. The accounts department has lost the invoice
C. The invoice has not been received but the supplier must be paid immediately
D. It is necessary to send a cheque with the order for supplier

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Control Over Receipts and Payments

8. A member of staff in your accounts department received a telephone call regarding non-payment of
a supplier. Your investigations indicate that the cheque was lost in the post. Which of the following
actions should occur immediately?
(i) Send a replacement cheque
(ii) Ask the bank to stop the cheque
(iii) Tell the supplier you will add the missing amount to the next month’s payment
(iv) Check your bank statement
(v) Check the recipient’s details
A. (i), (iii), (iv) and (v)
B. (iii), (iv), (v)
C. (ii), (iii)
D. (i), (iii), (iv)
9. Control over cash receipts involves which of these?
(i) Prompt, intact banking
(ii) A record of receipts
(iii) Security
(iv) Adequate segregation of duties
A. (i), (ii), (iii)
B. (i), (ii), (iv)
C. (i), (ii), (iii), (iv)
D. (i), (ii), (iii)
10. If you want to make sure that your money will be safe if cheques sent are lost in the post, you
should:
A. Not use the postal service in future
B. Always pay by cash
C. Always take the money in person
D. Cross your cheques ‘Account Payee only, not negotiable’
11. Why is a sequence check carried out in relation to cheques issued?
A. So that business does not run out of cheques
B. So that a bank reconciliation can be performed more easily
C. To detect and locate missing cheques
D. So that cheques frauds cannot occur
12. Jemimah is an office clerk who has been asked to write out separate cheques for five customers.
What advice would you not give her?
A. Check carefully that the amount of money in words matches the amount of money in
figures.
B. Ask the boss to sign the cheques before she writes them in case he is not available when
she has tem ready.
C. Fill in the counterfoils at the time of writing the cheques in case she forgets the details later.
D. Make sure that she puts today’s date on the cheques.

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ANSWERS TO MULTIPLE CHOICE QUESTIONS

Questions Answers Questions Answers
1 C 7 B
2 B 8 C
3 D 9 C
4 C 10 D
5 A 11 C
6 A 12 B

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Control Over Receipts and Payments