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Many businesses receive most of their cash on credit sales through the mail. Suppose you own a business in which you must hire employees to handle cash receipts and perform the related accounting duties. What internal control feature should you use to ensure that the cash received from customers is not taken by a dishonest employee?

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Suppose you own a business in which you must hire employees to handle cash receipts and perform the related accounting duties. What internal control feature should you use to ensure that the cash received from customers is not taken by a dishonest employee?

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Accounting controls are defined by the American institute of Certified Public Accountants (AICPA) as "the plan of organization and the procedures and records that are concerned with the safeguarding of assets and the reliability of financial records."

Below are some of the internal control features that we can use to avoid frauds and thefts:

1. We should make sure that all valid transactions are documented and recorded correctly. We should have procedures in place to periodically check that all transactions are recorded in the proper ...

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Umut Oltulu, MBA
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  • MBA, Texas A&M University-Kingsville
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